A defined contribution plan, like a 401(k) or 403(b), requires you to put in your own money.
Thus, the investment risk lies in the hands of the employee.
b. In a defined contribution plan, the employer must make larger-than-average contributions to the pension plan when investment returns have been below expectations.
The above statement is incorrect.
Which of the following statements about defined contribution plans is incorrect? a. Defined benefit plans are...
Which of the following statements is correct with respect to a defined contribution plan? Multiple Choice The payments made by the employer to fund a defined contribution pension plan create a pension fund asset on the balance sheet of the employer. The employer receives a tax deduction for amounts contributed to the pension plan trust and subsequent investment retums do not generate tax for the employer. The anticipated life span of the employees after retirement must be taken into consideration...
The interest cost included in the annual pension cost recorded by an employer sponsoring a defined benefit pension plan represents the a) difference between the expected and actual return on plan assets. b) increase in the defined benefit obligation due to the passage of time. c) increase in the fair value of plan assets due to the passage of time. d) interest earned on the plan assets for the year. An experience gain or loss (adjustment) is a) additional...
What is the difference between a defined benefit and a defined contribution retirement plan? Multiple Choice Defined benefit plans allow employees to set aside money on a tax-exempt basis. Defined contribution plans allow employees to determine a specific amount of money they wish to receive upon retirement. Defined contribution plans allow employees to contribute a set amount toward their retirement plan while employed. Defined benefit plans limit employee contributions while employed.
QUESTION 1 Typical defined benefit plans require contributions by both employer and employee True False QUESTION 2 Contributions to a defined contribution retirement plan are limited to the maximum amount that can be deducted from income for tax purposes. No excess contributions are allowed True False QUESTION 3 What term describes the portion of contributions/investments in a tax-deferred retirement plan that are owned by the employee? Underfunded Enrolled Distrubuted Vested
Which of the following statements accurately describe the basic provisions of a target benefit plan? I. Participants bear the risk of investment results. II. The amount of the retirement benefit is specified in the plan, and the employer is required to provide a specific terminal benefit. III. The contributions are limited to the lesser of 100% of compensation or $54,000 (2017 limit). IV. Like other defined contribution plans, target benefit plans generally are more favorable for younger participants. Group of...
The obligation for a defined contribution plan is calculated by a) discounting the benefit the employee will receive at retirement. b) add up contributions made plus interest earned less any benefits paid out. c) the cumulative contributions made to the pension plan. d) the amount the employer is obligated to contribute for the period.
Regarding the Pension Benefit Guarantee Corporation (PBGC), which of the following statements is true? The PBGC is an agency that insures undefined pension plans. The PBGC is an agency that insures defined contribution pension plans. The PBGC's fund is running out of money, due to the increase in the failure of the pension plans it insures. The PBGC has run out of money and has been disbanded
9-5. Are employees more likely to favor defined contribution plans over defined benefit plans? How about employers? Explain your answers.
Question 11 pts In Melvin's defined benefit plan, the actuary noted that life expectancy for retirees of Melvin's defined benefit plan is increasing at an above average rate for the fifth year in a row. The impact on plan costs of this trend would be to lower plan costs. T/F? True False Flag this Question Question 21 pts Shurfine, Inc. has a defined pension plan for the benefit of its employees. Over the last five years, the assets of the...
Term Answer Description ERISA A. This pension plan meets specified criteria established by the Internal Revenue Code. Vested rights B. The employee bears part of the contribution cost in this pension plan. c. Noncontributory pension plan Based on a formula, it computes the benefits, not contributions, to be paid out. Contributory pension plan D. Under this plan, the employer not only makes the contributions (based on a percentage of an employee's salary), controls the investment, and guarantees a given payout...