Question

Jenny must contribute at least 5 contributes a set amount as well. She is given choices regarding how the money is invested. When she retires, the amount she has available will depend on how much she invested herself, and the rate of return on the investments she chose. This pension plan is most likely classified as ________.

1) qualified, defined benefit
2) non-contributory, defined benefit
3)ontributory, defined contribution
4) contributory, non-qualified

Answer 1

Jenny's retirement plan, where both she and her employer contribute and the retirement benefit depends on investment returns, is a contributory, defined contribution plan.

Step-by-step explanation:

Jenny is involved in a pension plan where she must contribute a set amount, and the final retirement amount depends on how much she invested and the rate of return on her chosen investments. This type of retirement plan allows for the accumulation of retirement savings through employee and employer contributions, which are then invested in various vehicles. The plan described is a contributory, defined contribution plan, characterized by both the employer and the employee contributing to the retirement account, with the final benefit depending on the investment performance. Traditional pensions, known as defined benefit plans, are becoming less common compared to these defined contribution plans such as 401(k)s and 403(b)s.