Flake Corporation sets up a pension plan that is legally separate from Flake.The pension plan specifies the eligibility of employees, the types of promises to employees, the method of funding, and the pension plan administrator. Flake Corporation specifies the benefit that employees will receive during retirement.Employer contributions plus earnings from investments made with those contributions pay the specified benefit.Common terminology refers to such plans as ____________. The assets in the plan will usually not equal the liabilities of the plan, resulting in an overfunded or underfunded plan.

Question

Quizplus · Accepted Answer

The description matches that of a defined benefit pension plan, where the employer specifies the benefit an employee will receive upon retirement, and contributions made by the employer and earnings from investments pay for those benefits. The plan may be overfunded or underfunded as the assets in the plan may not equal the liabilities of the plan. None of the other options adequately match the given description.

Flake Corporation Sets Up a Pension Plan That Is Legally