Under a Defined-Contribution Plan, There Are Specific Guidelines for All

question 2

Multiple Choice

Under a defined-contribution plan, there are specific guidelines for all of the following, except

• A) how much you can contribute to your retirement fund.
• B) how much your employer can contribute to your retirement fund.
• C) early withdrawal penalties.
• D) estimating how much you will receive monthly at retirement.

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Definitions:

Compounded Annually

Refers to the calculation of interest where the amount is added to the principal at the end of each year, affecting the total interest over time.

Present Value

The market value now of a future financial amount or cash flows, factoring in a specific rate of gain.

Withdrawals

The act of removing funds from a bank account or investment vehicle.

Compounded Quarterly

An interest calculation method where interest is added to the principal sum of a deposit or loan on a quarterly basis, leading to interest earning interest.