Which of the following best describes a "defined contribution plan"?

Question

Quizplus · Accepted Answer

A defined contribution plan is a type of pension plan where the employee contributes a set amount of money into their account, and the employer may also contribute. The ultimate benefit is dependent on the investment returns earned on the employee's contributions, so the investment risk is placed on the employee. In contrast, a defined benefit plan (not mentioned in the question) places the investment risk on the employer and guarantees a specific benefit payout to the employee. The other answer choices are not accurate descriptions of a defined contribution plan.

Which of the Following Best Describes a "Defined Contribution Plan