The difference between a Money Purchase Plan and a Profit Sharing plan is that ________.

Question

Quizplus · Accepted Answer

The main difference between a Money Purchase Plan and a Profit Sharing Plan is that, in a Money Purchase Plan, the employer is required to contribute a specific amount of money each year, regardless of the company's profits. In contrast, a Profit Sharing Plan allows the employer to make discretionary contributions depending on the company's financial performance. So, choice B is correct as it highlights this difference. Option A is incorrect because there is no guarantee of profits, and option C is incorrect as it is a general statement and not always true.

The Difference Between a Money Purchase Plan and a Profit