In a _____ plan, an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company.
A)defined benefit
B)noncontributory benefit
C)401(k)
D)shared benefit

Question

Quizplus · Accepted Answer

A defined benefit plan is an employer-sponsored retirement plan where the employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company. The employer bears the investment risk and is responsible for funding the plan. In contrast, a 401(k) plan is a defined contribution plan where the employee contributes a portion of their salary towards the plan and the employer may or may not match the contribution, but the investment risk falls on the employee. A noncontributory benefit plan is a retirement plan where the entire cost is borne by the employer, and the employee does not contribute. A shared benefit plan is a retirement plan where the benefits are shared between the employer and the employee.

In a _____ Plan, an Employer Agrees to Provide a Specific