Which of the following is a tax advantage of qualified retirement plans?

The tax advantage of qualified retirement plans is that company contributions are tax-deductible. This means that when an employer makes contributions to a qualified retirement plan on behalf of employees, those contributions can be deducted from the company's taxable income. This deduction applies to contributions made to plans like 401(k) and traditional pension plans, which effectively reduces the employer's tax liability for the year in which the contributions are made.

This structure incentivizes employers to provide retirement benefits, as it lowers their overall cost of benefits as opposed to paying those amounts as taxable income. Consequently, it fosters a greater prevalence of employer-sponsored retirement plans, thereby benefiting employees by enhancing their retirement savings potential.

In contrast, employee contributions are typically made pre-tax in many plans, meaning they are not taxed until withdrawal, which is not considered immediate taxation. Also, earnings on investment within the retirement account are not taxed at the moment of contribution, rather they grow tax-deferred, meaning taxes are applied only upon distribution in retirement. Lastly, while some withdrawals from specific accounts can be tax-free (like Roth accounts), this is not a universal characteristic of all withdrawals from qualified plans. Thus, company contributions being tax-deductible stands out as a key tax benefit of such plans.