Question

Why have employers switched to defined?contribution plans instead of defined?benefits plans for most? companies?

A. Employers care deeply about what employees eventually receive from their plan.

B. The employer? doesn't want to do any bookkeeping for the retirement plan.

C. They remove the financial risk for future pension costs away from the company and pass it on to the employee.

D. All of the above are correct.

E. Only A and B are correct.

Jahwana works for a large corporation with a? 401(k) retirement plan. The company matches dollar for dollar the first? 5% of the? employee's salary contributed to the? 401(k). Jahwana currently earns? $40,000 in gross salary and she currently contributes? 15% of her salary into her? 401(k). How much money in dollars is the total contribution to her account every? year?

A. ?$2,000

B. ?$4,000

C. $6,000

D. $8,000

With a? ________, you, and usually your? employer, pay funds into your retirement plan.

A. deducted?benefit plan

B. contributory retirement plan

C. noncontributory retirement plan

D. none of the above

What advantage does the Roth IRA have over the traditional? IRA?

A. Contributions to a Roth IRA are tax deductible.

B. Early withdrawals from a Roth are subject to? penalities, so you? won't be tempted to dip into your investment.

C. Unlike the traditional? IRA, with a Roth you? don't pay taxes while your money is in the IRA.

D. With a Roth you take care of taxes ahead of time and end up with more money to spend at retirement.

Frank is considering a new job. However he is concerned about his pension fund. He knows that? ________ which is the requirement that he must work for his firm for a specified period of time prior to gaining ownership of the retirement contributions made by his employer has to be met first.

A. validating

B. tenuring

C. certifying

D. vesting

E. none of the above

Answer 1

1
Defined contribution plan
A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis.[1] Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings In a defined contribution plan, investment risk and investment rewards are assumed by each individual/employee/retiree and not by the sponsor/employer. This risk could be substantial.
Defined Benefit plan
A defined benefit plan, most often known as a pension, is a retirement account for which your employer ponies up all the money and promises you a set payout when you retire. A defined contribution plan, like a 401(k) or 403(b), requires you to put in your own money.
Reason for Employees switched to Defined contribution plan is, risk and rewards from such fund will bear by employee. No responsible to employer this much of amount to be pay at retirement
As not the same with define benefit plan, in this plan employer will have responsible and accountable to pay such amount at retirement
Hence option C is best answer for this question.
2
The amount in her account is
Employer contribution	=	$40,000*5%
	=	$2,000
Employee contribution	=	$40,000*15%
		$6,000
Total	=	$8,000
Option D is correct.
3
Option B is correct
in contributory plan, both employee and employer will contribute.
4
Need to stick around on the job for several years – typically five – to be fully “vested” in the plan
Option D is correct