Which of the following characteristics does not describe a defined benefit pension plan?
A)Actuarial calculations are required to determine the employer's annual contribution.
B)Upon retirement, the employee's pension amount depends on the value of her or his account.
C)Forfeitures must reduce subsequent funding costs and cannot increase the benefits any participant can receive under the plan.
D)A separate account is not required to be maintained for each participant.
E)None of these.

Question

Quizplus · Accepted Answer

A defined benefit pension plan guarantees a specific retirement benefit amount based on a predetermined formula, such as years of service and average salary. Actuarial calculations are required to determine the employer's annual contribution, and forfeitures must reduce subsequent funding costs and cannot increase the benefits any participant can receive under the plan. A separate account is not required to be maintained for each participant. The pension amount upon retirement is not dependent on the value of the employee's account, as in a defined contribution plan.

Which of the Following Characteristics Does Not Describe a Defined