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In an attempt to encourage citizens

by gmatdriller » Sat Nov 06, 2010 1:25 am
In an attempt to encourage citizens to put more resources into
retirement savings, the government of Sublima has instiruded a
new program allowing for new, tax-exempt savings account, in
which contributions of up to $10,000 per year will not be taxed,
unless the money is withdrawn before the contributor reaches the
age of retirement. SInce the introduction of this program, over one
million dollars has been placed into this new tax-exempt retirement
savings accounts. Clearly, the new plan is working exactly as the
government expected.

Which of the folowing is an assumption on which the argument is
based?

A. Most of the citizens of Sublima will not withdraw at least some of
the invested funds from the new, tax-exempt retirement savings
account
B. Most of the citizens of Sublima do not already have savings account
from which they are withdrawing money to invest into the new
tax-exempt retirement savings acount established undder this new
plan.
C. The funds invested in, and the interest earned from, regular
retirement savings account are taxed progressively according to the
contributors total annual income.
D. The referenced plan was widely criticized when it was instituted, but
now is widely proclaimed an inspired success.
E. Those citizens who already have tax-exempt retirement savinga
accounts offered through their employers are not allowed, by law, to
participate in the referenced plan.

Please discuss how you arrive at you answer, also please give a
a critique of the supposed wrong ones. Thanks.

OA IMO: A
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by ashokkadam » Sun Nov 07, 2010 8:21 am
IMO too, A is the answer.
gmatdriller wrote:In an attempt to encourage citizens to put more resources into
retirement savings, the government of Sublima has instiruded a
new program allowing for new, tax-exempt savings account, in
which contributions of up to $10,000 per year will not be taxed,
unless the money is withdrawn before the contributor reaches the
age of retirement. SInce the introduction of this program, over one
million dollars has been placed into this new tax-exempt retirement
savings accounts. Clearly, the new plan is working exactly as the
government expected.

Which of the folowing is an assumption on which the argument is
based?

A. Most of the citizens of Sublima will not withdraw at least some of
the invested funds from the new, tax-exempt retirement savings
account
B. Most of the citizens of Sublima do not already have savings account
from which they are withdrawing money to invest into the new
tax-exempt retirement savings acount established undder this new
plan.
C. The funds invested in, and the interest earned from, regular
retirement savings account are taxed progressively according to the
contributors total annual income.
D. The referenced plan was widely criticized when it was instituted, but
now is widely proclaimed an inspired success.
E. Those citizens who already have tax-exempt retirement savinga
accounts offered through their employers are not allowed, by law, to
participate in the referenced plan.

Please discuss how you arrive at you answer, also please give a
a critique of the supposed wrong ones. Thanks.

OA IMO: A
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by rkanthilal » Sun Nov 07, 2010 5:03 pm
I actually think the answer is B. Is the OA A or is that your pick.?

P1: Government of Sublima wants to encourage retirement savings.
P2: Government of Sublima has instituted a new program allowing for new, tax-exempt savings account, in which contributions of up to $10,000 per year will not be taxed, unless the money is withdrawn before the contributor reaches the age of retirement.
P3: Since the introduction of this program, over one million dollars has been placed into this new tax-exempt retirement savings accounts.
C1: The new plan is working exactly as the government expected. (Note: What the government "expects" is that people will increase their retirement savings.)

We are looking for an assumption.

A. "Most of the citizens of Sublima will not withdraw at least some of the invested funds from the new, tax-exempt retirement savings account." Incorrect. Try negating this answer and see if the conclusion holds. The answer negated becomes: "Most of the citizens of Sublima will withdraw at least some of the invested funds from the new, tax-exempt retirement savings account."

Does this weaken the conclusion? No. Even if most of the citizens withdraw some of their invested funds they will still have some funds invested in the tax-exempt retirement savings account. Therefore the conclusion still holds that the plan increased retirement savings. For this reason, I don't believe this is an assumption.

B. "Most of the citizens of Sublima do not already have savings account from which they are withdrawing money to invest into the new tax-exempt retirement savings account established under this new plan." Correct. Now, try negating this answer and see if the conclusion holds. The answer negated becomes: "Most of the citizens of Sublima do already have a savings account from which they are withdrawing money to invest into the new tax-exempt retirement savings account established under this new plan."

Does this weaken the conclusion? Yes. If people are already saving in a traditional account and all they are doing is transferring those funds into the new tax exempt account then the conclusion that savings has increased does not hold. Therefore, this is an assumption. The government is assuming that the over one million dollars that has been placed into the new tax-exempt retirement accounts is "new" money. In other words, it is money that was not already being saved.

C. The funds invested in, and the interest earned from, regular retirement savings account are taxed progressively according to the contributors total annual income. Incorrect. This is irrelevant. We don't care about the taxes. We want to know if retirement savings has increased.

D. "The referenced plan was widely criticized when it was instituted, but now is widely proclaimed an inspired success." Incorrect.

E. "Those citizens who already have tax-exempt retirement savings accounts offered through their employers are not allowed, by law, to participate in the referenced plan." Incorrect. This answer was a close second choice for me. This answer negated becomes: "Those citizens who already have tax-exempt retirement savings accounts offered through their employers are allowed, by law, to participate in the referenced plan."

Does this weaken the conclusion? Almost. If people who were already saving through their employers started transferring funds into the new tax exempt accounts, then the conclusion that retirement savings increased would not hold for the same reasons as in (B). The reason I did not choose this answer is because it refers to citizens who already have tax-exempt retirement savings accounts. Since they are already getting the tax benefits they would have no reason to switch to the government plan.

I would choose B. gmatdriller, can you clarify on the OA. Thanks.
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by frank1 » Sun Nov 07, 2010 7:09 pm
IMO A
Here is home i came down to it,
Conclusion:In an attempt to encourage citizens to put more resources into retirement savings, goverment is had account plan.....AND now that the new plan is working exactly as the government expected.

and see this line(clause):
unless the money is withdrawn before the contributor reaches the age of retirement.
Most of the time GMAT question wont supply info like these with some meaning.(not just plain)

So,
A correct.
People have deposited.First part of the game is only over.Secod part is they should not withdraw it as per clause.If all people start with drawing in the middle or with in few months or years.
The objective of plan will not be met.PLAN WILL FAIL.So it must be TRUE.
Wht goverment expects:people to not draw money for certain period as per plan

B.Candidate but
see wording 'Most of the citizens' it is not old citizen at first place and logical thing is suppose person had another account Z with bank X now it may not be doing anything productive there or GENERAL ACCOUNT which has nothing to do with retirement fund.(see conclusion)
So,if person transfers money from his X bank account to current plan current plan will grow.
and if there are no such people then other may be participate in plan.
So no problem there.

It may be true but it doesnt affect overall effectiveness of the PLAN.
Even if people does so no effect in conclusion or goal is still met.

C,D,E out of scope and irrelevant.
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by rooster » Sun Nov 07, 2010 7:55 pm
frank1 wrote:IMO A
Here is home i came down to it,
Conclusion:In an attempt to encourage citizens to put more resources into retirement savings, goverment is had account plan.....AND now that the new plan is working exactly as the government expected.

and see this line(clause):
unless the money is withdrawn before the contributor reaches the age of retirement.
Most of the time GMAT question wont supply info like these with some meaning.(not just plain)

So,
A correct.
People have deposited.First part of the game is only over.Secod part is they should not withdraw it as per clause.If all people start with drawing in the middle or with in few months or years.
The objective of plan will not be met.PLAN WILL FAIL.So it must be TRUE.
Wht goverment expects:people to not draw money for certain period as per plan

B.Candidate but
see wording 'Most of the citizens' it is not old citizen at first place and logical thing is suppose person had another account Z with bank X now it may not be doing anything productive there or GENERAL ACCOUNT which has nothing to do with retirement fund.(see conclusion)
So,if person transfers money from his X bank account to current plan current plan will grow.
and if there are no such people then other may be participate in plan.
So no problem there.

It may be true but it doesnt affect overall effectiveness of the PLAN.
Even if people does so no effect in conclusion or goal is still met.

C,D,E out of scope and irrelevant.
Hold on, your logic is that it says "most of citizens" but the term is the same in both answers. Additionally, as I just saw in rkanthilal's post, there is no real relativity in taking some money out in investment, the point is the government wants to enhance money put in thus, if I put in 100 bucks out 99, I would still have more money in my retirement savings than before. Additionally, the point is that there wasn't savings to begin with, so IMO this is irrelevant.

B sets a good choice because it is saying the 1million is totally due to this program, not from a possibility that it is coming from somewhere else where money may have been already available.

+1 for B
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by ashokkadam » Sun Nov 07, 2010 8:29 pm
I think A is correct answer!!!

See in A, "at least some" means it can be "some" or "all". So if A is negated, the arguments falls.
See in B, if negated, the argument does not fall because the plan will continue to work.

rkanthilal wrote:I actually think the answer is B. Is the OA A or is that your pick.?

P1: Government of Sublima wants to encourage retirement savings.
P2: Government of Sublima has instituted a new program allowing for new, tax-exempt savings account, in which contributions of up to $10,000 per year will not be taxed, unless the money is withdrawn before the contributor reaches the age of retirement.
P3: Since the introduction of this program, over one million dollars has been placed into this new tax-exempt retirement savings accounts.
C1: The new plan is working exactly as the government expected. (Note: What the government "expects" is that people will increase their retirement savings.)

We are looking for an assumption.

A. "Most of the citizens of Sublima will not withdraw at least some of the invested funds from the new, tax-exempt retirement savings account." Incorrect. Try negating this answer and see if the conclusion holds. The answer negated becomes: "Most of the citizens of Sublima will withdraw at least some of the invested funds from the new, tax-exempt retirement savings account."

Does this weaken the conclusion? No. Even if most of the citizens withdraw some of their invested funds they will still have some funds invested in the tax-exempt retirement savings account. Therefore the conclusion still holds that the plan increased retirement savings. For this reason, I don't believe this is an assumption.

B. "Most of the citizens of Sublima do not already have savings account from which they are withdrawing money to invest into the new tax-exempt retirement savings account established under this new plan." Correct. Now, try negating this answer and see if the conclusion holds. The answer negated becomes: "Most of the citizens of Sublima do already have a savings account from which they are withdrawing money to invest into the new tax-exempt retirement savings account established under this new plan."

Does this weaken the conclusion? Yes. If people are already saving in a traditional account and all they are doing is transferring those funds into the new tax exempt account then the conclusion that savings has increased does not hold. Therefore, this is an assumption. The government is assuming that the over one million dollars that has been placed into the new tax-exempt retirement accounts is "new" money. In other words, it is money that was not already being saved.

C. The funds invested in, and the interest earned from, regular retirement savings account are taxed progressively according to the contributors total annual income. Incorrect. This is irrelevant. We don't care about the taxes. We want to know if retirement savings has increased.

D. "The referenced plan was widely criticized when it was instituted, but now is widely proclaimed an inspired success." Incorrect.

E. "Those citizens who already have tax-exempt retirement savings accounts offered through their employers are not allowed, by law, to participate in the referenced plan." Incorrect. This answer was a close second choice for me. This answer negated becomes: "Those citizens who already have tax-exempt retirement savings accounts offered through their employers are allowed, by law, to participate in the referenced plan."

Does this weaken the conclusion? Almost. If people who were already saving through their employers started transferring funds into the new tax exempt accounts, then the conclusion that retirement savings increased would not hold for the same reasons as in (B). The reason I did not choose this answer is because it refers to citizens who already have tax-exempt retirement savings accounts. Since they are already getting the tax benefits they would have no reason to switch to the government plan.

I would choose B. gmatdriller, can you clarify on the OA. Thanks.
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by rkanthilal » Sun Nov 07, 2010 9:13 pm
I love it when there's a good debate. It looks like rooster and I are in the minority on this one. :)

I'm still sticking with B.

Let me add one more reason why I think A is incorrect. The conclusion is made referring to the present.

The new plan IS working exactly as expected
NOT
The new plan WILL work exactly as expected

If the conclusion used the future tense "will" then I could see how (A) may be correct. However this is not the case. Even if, in the future, everyone that invested in the new account ends up withdrawing all of their money before retirement, that does not affect the conclusion. The conclusion still holds that as of right now the plan is working exactly as expected. The people of Sublima are saving more as of right now than they were before the plan started.

Compare this to choice (B). If most of the citizens of Sublima already have a savings account and they are just transferring that money to the new tax-exempt account, then the conclusion that as of right now the plan is working exactly as expected does not hold. Because the people of Sublima are just transferring funds, as of right now they are saving basically the same amount as they were before the plan.
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by rooster » Mon Nov 08, 2010 2:53 am
gmatdriller, what is the actual OA?
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by frank1 » Mon Nov 08, 2010 3:19 am
rooster wrote: Hold on, your logic is that it says "most of citizens" but the term is the same in both answers. Additionally, as I just saw in rkanthilal's post, there is no real relativity in taking some money out in investment, the point is the government wants to enhance money put in thus, if I put in 100 bucks out 99, I would still have more money in my retirement savings than before. Additionally, the point is that there wasn't savings to begin with, so IMO this is irrelevant.

B sets a good choice because it is saying the 1million is totally due to this program, not from a possibility that it is coming from somewhere else where money may have been already available.

+1 for B
Ok lets look it in this way
Goverment brings our new plans to increase X fund
It is completed in 2 phases to be successful
Phase 1:people deposit money
Phase 2:They should not withdraw.(This has to be true for conclusion to hold that 'it is successful')
Now phase 1 with complete BUT FAULT in stimuli is the author CONCLUDES the plan is sucessful when only first part is complete and second part has not started.
So author ASSUMES something when he concludes that
So he must assume that Phase 2 will any how happen.(or people will withdraw)

Ok i think i learned this from guru...
lets question
if it is so THEN WHAT.....or if we remove the given evidence does conclusion falls....
Ok A
people have deposited and now start withdrawing:THEN WHAT ....then you cannot say it is successful ...conclusion falls....

For B
People are withdrawing money from Z account to our new fund.
Then WHAT....it is infact good and proves plan is successful
Now lets remove this.....if people didnt withdraw....can we conclude it was not successful:NO....conclusion still holds....

So A
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by sumit.sinha » Mon Nov 08, 2010 3:44 am
IMO B
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by Dani@MasterGMAT » Mon Nov 08, 2010 6:38 am
Have to come down firmly on the side of B here.
The purpose of the plan is to get people to invest more resources into retirement services. If the reverse of B is true, then the money is just changing pockets - money left for retirement in plan z is now moved to this new retirement plan, but no "new" money (i.e. no more resources) is set aside in retirement. Thus, B is something I have to assume in order to proclaim the plan a success - it is a necessary assumption, because it eliminates a possible reason why the plan will not be characterized a success.

A seems correct as well, so there has to be something wrong with either A or B to decide between them. The problem with A is that it is missing the crucial "before retirement age" to be a complete answer. If people withdraw the money after retirement age, then we're fine with it - the plan is a success. Thus, A goes too far to be a truly necessary assumption - I don't need to assume that people will not withdraw anything at all for the plan to be a success - I just want them to wait until after retirement age to do so.
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by rooster » Mon Nov 08, 2010 6:42 am
frank1 wrote:
Ok i think i learned this from guru...
lets question
if it is so THEN WHAT.....or if we remove the given evidence does conclusion falls....
Ok A
people have deposited and now start withdrawing:THEN WHAT ....then you cannot say it is successful ...conclusion falls....

For B
People are withdrawing money from Z account to our new fund.
Then WHAT....it is infact good and proves plan is successful
Now lets remove this.....if people didnt withdraw....can we conclude it was not successful:NO....conclusion still holds....

So A
But the point is to increase savings, if you are taking 10 bucks from one savings account and putting it into another savings account, how would you be increasing your savings? It's like taking a 20 dollar bill from your left pocket and putting it into your right pocket; you still have 20 dollars, you didn't increase your cash amount. I don't see how the conclusion would fail, the point is to increase savings. A can do that even if people are taking a little bit, it's more than before.
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by frank1 » Mon Nov 08, 2010 9:05 am
rooster wrote:
But the point is to increase savings, if you are taking 10 bucks from one savings account and putting it into another savings account, how would you be increasing your savings? It's like taking a 20 dollar bill from your left pocket and putting it into your right pocket; you still have 20 dollars, you didn't increase your cash amount. I don't see how the conclusion would fail, the point is to increase savings. A can do that even if people are taking a little bit, it's more than before.
I think that would be too broad.
I think conclusion is not increasing overall fund of a person or increasing fund of whole country.
It is about increasing particular fund.

so if somebody takes 10 bucks from another fund and deposit it the new fund...
there should be big problem for current fund...infact it will be considered to have succeded.

I think only point which can make A incorrect can be 'some' in answer choice

other wise as we have this
unless the money is withdrawn before the contributor reaches the age of retirement.
...unless this happens only conclusion is valid...
if people withdraws then conclusion is not valid.

Now i want to ask
what is source and OA.
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by johnconnor99 » Mon Nov 08, 2010 5:30 pm
I guess the key here is "to put more resources into
retirement savings".......So, as long as money flows into the retirement account , the source from which the money is acquired is irrelevant. E for me.
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by rooster » Mon Nov 08, 2010 7:32 pm
Dani@MasterGMAT wrote:Have to come down firmly on the side of B here.
The purpose of the plan is to get people to invest more resources into retirement services. If the reverse of B is true, then the money is just changing pockets - money left for retirement in plan z is now moved to this new retirement plan, but no "new" money (i.e. no more resources) is set aside in retirement. Thus, B is something I have to assume in order to proclaim the plan a success - it is a necessary assumption, because it eliminates a possible reason why the plan will not be characterized a success.

A seems correct as well, so there has to be something wrong with either A or B to decide between them. The problem with A is that it is missing the crucial "before retirement age" to be a complete answer. If people withdraw the money after retirement age, then we're fine with it - the plan is a success. Thus, A goes too far to be a truly necessary assumption - I don't need to assume that people will not withdraw anything at all for the plan to be a success - I just want them to wait until after retirement age to do so.
Sorry Dani, did not realize you made a similar statement :P
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