A 401(k) plan is also called a cash balance pension plan.

Question

Quizplus · Accepted Answer

A 401(k) plan is not the same as a cash balance pension plan. A 401(k) plan is a defined contribution retirement plan, where the employee contributes a percentage of their income and the employer may also contribute. A cash balance pension plan is a type of defined benefit plan, where the employer contributes a set amount each year and the employee's retirement benefit is based on a predetermined formula.

A 401(k) Plan Is Also Called a Cash Balance Pension