2. You work for Hoosier Corp, a great company that offers a 401(k) plan for all of its employees. One of the investment options in the 401(k) plan is a savings account which has a APY of 2.5%. At the start of last year, you contributed $1,000 to your 401(k) account and put the money in the savings account in the 401(k) plan.

You also have a savings account with Bank of Hoosier which has a APY of 3%. This account is taxable. At the start of last year, you deposited $2,000 to this savings account.

If your tax rate is 15%, which account gives you the higher after-tax rate of return last year? Assume you are not withdrawing any money from your 401(k) account but let it grow tax-deferred.

A. The savings account in your 401(k) plan

B. The savings account with Bank of Hoosier

C. The after-tax rate of returns are the same for both accounts