A 401k plan is a type of defined contribution pension plan where employees have the option to contribute a portion of their salary to their retirement account. The employer may also contribute, but they are not required to do so. This type of plan does not create a liability for the employer, but rather shifts the responsibility for retirement savings to the employee.

Solved

A 401k Plan

Question 144

Multiple Choice

A 401k plan:

A) is a type of defined contribution pension plan.
B) is a type of defined benefit pension plan.
C) creates a liability for the employer.
D) creates a liability for the employee.

Correct Answer: