Question

2. In which of the following qualified retirement plans would the individual investment performance of the assets held within the trust influence the actual retirement benefit the participants would receive?

1. Defined benefit plan.

2. Cross-tested plan.

3. Target benefit plan.

4. Cash balance plan.

A. 2 only.

B. 1 and 4.

C. 2 and 3.

D. 1, 2, and 4

Answer 1

Unlike, a defined benefit plan ,in the target benefit plan, the benefits provided to participants at retirement are based on the performance of the investments and are not guaranteed.Cross testing is type of retirement plan which ahs different contribution % from different group of employees.A cash balance plan is a defined benefit plan.

So, the individual investment performance of the assets held within the trust influence the actual retirement benefit the particiapants would receive in case of Cross tested plan and Target benefit plan.

Correct Answer Option C .2 and 3.