Question

34. the individual performance of the plan investments for which of the following qualified plans will affect the final amount the employee will actually receive?
1. Target benefit plan.
2. Cash balance pan.
3. Profit sharing plan.
A. 3 only
B. 1 and 2
C. 1 and 3
D. 1, 2, and 3

Answer 1

Below two benefits plan are dependent on the individual performance of the plan investments. Hence, these investment plans affect final amount the employee will actually receive.

Target benefit plan – It is similar to a defined benefit plan since contributions are based on projected retirement benefits. In this plan, the benefits provided to participants at retirement are based on the performance of the investments.

Profit sharing plan - In profit sharing plan, contributions from the employer are discretionary. In this type of plan, an employee receives a percentage of a company's profits based on its quarterly or annual performance. If the company does not have a profit, it does not have to make contributions to the plan.

Hence, C is a correct option.