A plan that contains a formula for determining retirement benefits is known as a ________.
A)defined contribution pension plan
B)defined benefit pension plan
C)cash balance plan
D)401(k)plan

Question

Quizplus · Accepted Answer

B)With defined benefit pension plans, employees know ahead of time the pension benefits they will receive (the benefit is "defined" or specified by amount or formula). In contrast, defined contribution pension plans specify what contribution the employee and/or employer will make to the employee's retirement or savings fund.

A Plan That Contains a Formula for Determining Retirement Benefits