Future Business Leaders of America (FBLA) Business Calculations Practice Test

Deductions that employees must have withheld from each paycheck include all of the following, except:

1. Medicare

2. Income tax

3. 401k

4. Social security

The correct answer is: 401k

In the context of employee paycheck deductions, it’s important to distinguish between mandatory and voluntary deductions. Medicare, income tax, and Social Security are all mandatory deductions required by law. These funds are taken directly from each paycheck and are used to support social programs and taxation. Medicare is a federal health insurance program that provides coverage primarily for individuals aged 65 and older or for certain younger individuals with disabilities. The income tax deduction is a necessary withholding that varies based on income levels and is part of the federal and possibly state tax obligations. Similarly, Social Security deductions fund the Social Security program, which provides retirement and disability benefits. On the other hand, a 401(k) plan contribution is usually a voluntary deduction. Employees often opt to contribute to their 401(k) retirement savings plans, but this is not required by law. Therefore, while many employees choose to have this amount withheld from their paychecks to save for retirement, it is not a mandatory deduction like the others. This distinction makes the 401(k) contribution the correct answer in the context of this question, as it is the only deduction that doesn’t have to be withheld from each paycheck.