The Main Difference Between a Defined-Benefit Plan and Defined-Contribution Plan

question 111

Multiple Choice

The main difference between a defined-benefit plan and defined-contribution plan is

• A) a defined-contribution plan pays more at retirement.
• B) defined-benefit plan payments are not taxable.
• C) defined-contribution plan payments are not taxable.
• D) the company is the only contributor to a defined-benefit plan while you and the company may both contribute to a defined-contribution plan.

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Definitions:

Stock Prices

The market value of a company's shares, fluctuating based on supply and demand, corporate news, and market conditions.

Synergistic Benefits

The advantages or positive outcomes that arise when two or more entities (such as companies or processes) combine or interact, leading to a result that is greater than the sum of their separate effects.

Closely Held Firm

A business entity where a small group of shareholders hold a majority of the ownership and it's not publicly traded.

Stabilize Earnings

Efforts or strategies used by businesses to maintain consistent and predictable profit levels despite market fluctuations.