Which of the following statements is (are)true regarding cash-balance pension plans?
I.Cash balance plans are defined contribution plans.
II.Under a cash balance plan,the employer creates an actual account for each employee into which the employer makes contributions and allocates investment gains and losses.

Question

Quizplus · Accepted Answer

Cash balance plans are defined benefit plans, not defined contribution plans. The employer does not create an actual account for each employee; instead, they maintain a hypothetical account that determines the benefit.

Which of the Following Statements Is (Are)true Regarding Cash-Balance Pension