Which of the following describes a defined benefit plan?
A) Distribution amounts determined by employee and employer contributions.
B) Provides fixed income to the plan participants based on a formula.
C) Allows executives to defer income for a period of years.
D) Retirement account set up by an individual.

Question

Quizplus · Accepted Answer

A defined benefit plan provides a fixed income to plan participants based on a formula, typically taking into account factors such as years of service and salary history. This is different from a defined contribution plan, in which distribution amounts are determined by employee and employer contributions, and an individual retirement account (IRA), which is set up by an individual. Deferred compensation plans (choice C) are also a separate type of plan.

Which of the Following Describes a Defined Benefit Plan