Question

When each participating employer has a separate account and each government is responsible for keeping its own pension contributions up to date, a(n) _____ multi-employer defined benefit plan exists.

Answer 1

A 'segregated' multi-employer defined benefit plan exists when each employer has separate accounts and maintains its own contributions. Newer retirement plans like 401(k)s focus on defined contributions, offering tax benefits, portability, and potential protection from inflation.

Step-by-step explanation:

When each participating employer has a separate account and each government is responsible for keeping its own pension contributions up to date, a segregated multi-employer defined benefit plan exists. Pensions and other defined benefits retirement plans have become less common, largely replaced by defined contribution plans such as 401(k)s and 403(b)s. In contrast to defined benefit plans, defined contribution plans involve the employer making fixed contributions to the worker's retirement account on a regular basis. These are advantageous as they are tax deferral, portable, and can provide real rates of return that help protect retirees from the impact of inflation. Additionally, companies offering pensions must contribute to the Pension Benefit Guarantee Corporation to safeguard at least some pension benefits in cases of bankruptcy.