A cash balance requires contributions from the employer only and is most generous to young employees who have many years ahead in which to earn interest. If employees change jobs, they generally can roll over the balance into an individual retirement account.

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A Cash Balance Plan

Question 54

Multiple Choice

A cash balance plan:

A) requires contributions from the employer and the employee.
B) does not permit rolling over of balance into an individual retirement account in case an employee changes jobs.
C) earns interest according to a predetermined rate.
D) is most generous to older employees.
E) does not guarantee the rate of interest.

Correct Answer: