Final answer:
In a 401(k) Plan, an employee can make an election to have the employer contribute to their retirement account or pay an equivalent amount to the employee in case. The employer's contributions are invested in various investment options. So, the correct answer is option c.
Step-by-step explanation:
In the 401(k) Plan, an employee may make an election to have the employer contribute to the plan on their behalf or pay an equivalent amount to the employee in case. The 401(k) plan is a defined contribution retirement plan where both the employer and employee can make contributions to the employee's retirement account. These contributions are invested in a variety of investment options, and the funds grow tax-deferred until retirement.
On the other hand, the Defined Benefit Pension Plan is a traditional pension plan where the employer promises to pay a specific benefit to the employee upon retirement. In this plan, the employer is solely responsible for funding the pension and determining the benefit amount based on factors like salary and years of service.
The Money Purchase Pension Plan and Defined Contribution Pension Plan are similar to the 401(k) plan in that the contributions are made on behalf of the employee and invested to fund their retirement. The main difference is that the Money Purchase Pension Plan requires a fixed contribution from the employer, while the Defined Contribution Pension Plan allows for flexibility in contribution amounts.
So, the correct answer is option c.