Question

Which is true about Money Purchase Pension Plans?

1. It is a defined contribution pension plan.
2. Contributions are mandatory.
3. They guarantee a specific benefit at retirement.

a.) 1 only
b.) 1 and 2 only
c.) 2 and 3 only
d.) 1, 2, and 3

Answer 1

Money Purchase Pension Plans are a type of defined contribution pension plan with mandatory contributions, but they do not guarantee a specific benefit at retirement.

Step-by-step explanation:

Money Purchase Pension Plans are a type of defined contribution pension plan, so statement 1 is true. With this type of plan, contributions are mandatory, which means statement 2 is also true. However, Money Purchase Pension Plans do not guarantee a specific benefit at retirement, so statement 3 is false. Therefore, the correct answer is a) 1 only.