Why do employers currently choose the 401(k),401(a),or 403(b)plan rather than a traditional defined benefit pension plan?
A) Employers receive increased incentives to offer these plans and they carry substantially reduced risk.
B) There are guaranteed benefits for employees and the employer bears no risk of investment under these plans.
C) These plans ensure that if the company fails,the accrued pension benefits will nevertheless be paid.
D) Under these plans,employers have 40 years to fully fund an underfunded plan.

Question

Quizplus · Accepted Answer

Employers currently choose 401(k), 401(a), or 403(b) plans rather than traditional defined benefit pension plans because they receive increased incentives to offer these plans and they carry substantially reduced risk. With defined benefit pension plans, the employer bears the risk of investment and ensuring guaranteed benefits for employees, which can be costly and volatile.

Why Do Employers Currently Choose the 401(k),401(a),or 403(b)plan Rather Than