Question

An employee is not guaranteed a pension but rather has an account that can be used to fund retirement benefits by the purchase of an annuity at

1. Defined-benefit plan retirement age or by the simple withdrawal of funds.
2. Defined-contribution plan a defined-contribution plan in which the employer's
3. Minimum vesting standards contributions typically are
4. Vesting based on the firm's profits. refers to the employee's
5. Trust-fund plan right to (or ownership of the employer's
6. Profit sharing plan contributions, or benefits attributable to the contributions, if employment terminates

Answer 1

A defined-contribution plan, like a 401(k), involves fixed regular employer contributions to fund retirement benefits, is tax-deferred, portable, and helps reduce inflation impact on retirement savings.

Step-by-step explanation:

In a defined-contribution plan, such as a 401(k) or 403(b), the employer makes a fixed contribution to an employee's retirement account regularly. The employee often contributes as well, and these contributions can then be invested in a variety of investment vehicles. The primary goal is to fund retirement benefits, providing financial security for workers when they retire. One of the main advantages of these plans is that they are tax-deferred and portable. This means that if an employee moves to a different employer, they can take their plan with them. In addition, such plans help retirees avoid the inflation costs that can erode traditional pension payouts.