Tran is employed at a company that annually contributes anywhere from 2% up to 12% of his salary into his retirement plan,depending on how good the company's financials were that year.This type of contribution plan is a(n)________ plan.

Question

Quizplus · Accepted Answer

A profit-sharing plan is a retirement plan in which an employer makes contributions to the retirement accounts of its employees, based on the company's profitability. The percentage contributed can vary from year to year and is determined by how well the company performs. This aligns the interests of the employer and the employee, as both benefit from the company's success. The other options listed, 401(k) and ESOP, are also retirement plans but do not have the variability in contributions based on company profitability. A performance plan is not typically associated with retirement benefits.

Tran Is Employed at a Company That Annually Contributes Anywhere