Profit-sharing plans and employee stock ownership plans are examples of defined-benefit plans.

Question

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Profit-sharing plans and employee stock ownership plans are examples of defined-contribution plans, not defined-benefit plans. In defined-contribution plans, the employee and/or employer make contributions to the plan, but the ultimate benefit received by the employee depends on the performance of the investments in the plan. In defined-benefit plans, the benefit received by the employee is predetermined based on factors such as salary and years of service.

Profit-Sharing Plans and Employee Stock Ownership Plans Are Examples of Defined-Benefit