Question

County A has decided to offer their employees a retirement plan. What is the major       ...

County A has decided to offer their employees a retirement plan. What is the major

       form pensions that a city would use?

            A. Defined Benefit Plan

            B. Defined Contribution Plan

            C. 401K

            D. Single Employer Plan

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Answer #1

The major form pensions that a city would use will be C.) 401K

Explanation

A 401(k) Plan is a defined contribution plan that is a cash or deferred arrangement. Employees can elect to defer receiving a portion of their salary which is instead contributed on their behalf, before taxes, to the 401(k) plan. Sometimes the employer may match these contributions. There is a dollar limit on the amount an employee may elect to defer each year. An employer must advise employees of any limits that may apply. Employees who participate in 401(k) plans assume responsibility for their retirement income by contributing part of their salary and, in many instances, by directing their own investments.

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