Evan is the human resource manager of a one-year-old technology company. The founder wants him to set up a retirement plan. Evan thinks the best approach during the company's early years would be a defined-contribution plan funded with profit-sharing dollars. Which statement best supports Evan's idea?

Question

Quizplus · Accepted Answer

A defined-contribution plan funded with profit-sharing dollars gives the company more flexibility during the early years as it establishes itself. This is because the contribution amount can be adjusted based on the company's profitability, and there are no set obligations to make contributions in years where profits are low. This allows the company to conserve cash in leaner years while still offering a retirement benefit to employees.

Evan Is the Human Resource Manager of a One-Year-Old Technology