Profit-sharing plans or 401(k) plans are examples of defined-contribution plans.

Question

Quizplus · Accepted Answer

Profit-sharing plans and 401(k) plans are both types of defined-contribution plans where employees make contributions and the employer may also make contributions based on a predetermined formula. The final benefit amount available to the employee at retirement depends on the amount contributed and the performance of the investments in the plan.

Profit-Sharing Plans or 401(k) Plans Are Examples of Defined-Contribution Plans