Final answer:
A defined contribution plan such as a 401(k) is a financial plan that pays out an amount based on the account balance and chosen withdrawal period.
Step-by-step explanation:
The type of financial plan that pays an amount dependent on the total in the account and the number of years a person wants to withdraw money for is typically a defined contribution plan, such as a 401(k) or 403(b). In these plans, both the employer and the employee contribute a fixed amount to the worker's retirement account, which can be invested in various vehicles like stocks, bonds, and annuities. The total amount available upon retirement depends on the investment performance and the contributions made over the years. These plans offer flexibility and portability, and thanks to tax-deferred status, taxes are not paid until the funds are withdrawn. However, unlike traditional pensions, which are defined benefits plans offering a fixed amount per year in retirement, the income from a defined contribution plan may fluctuate based on investment returns and the withdrawal plan chosen by the retiree.