Some Employers Specify the Benefit That Employees Will Receive During

question 10

Multiple Choice

Some employers specify the benefit that employees will receive during retirement.The employer must contribute sufficient amounts to the pension plan so that those contributions plus earnings from investments made with those contributions will be sufficient to pay the specified benefit.Such plans are referred to as

• A)defined benefit pension plans.
• B)defined contribution pension plans.
• C)deferred compensation plans.
• D)529 Plans.
• E)individual retirement accounts.

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Definitions:

Forecasted Growth

The expected rate at which a company, sector, or the economy as a whole is anticipated to grow over a specific period.

Retained Earnings

The portion of net income that is retained by a corporation rather than distributed to its shareholders as dividends.

Indirect Planning

The process of setting broader goals and strategies that indirectly guide actions and decisions without specific, detailed plans.

Interest Rates

The fee, shown as a percentage of the principal amount, that a lender imposes on a borrower for the usage of its assets.