Question

Burt Reynolds has changed jobs. His last retirement plan's contributions depended on how well the company performed and he shared in the earnings. His present employer allows him ownership in the firm, although this is the riskiest plan. Burt's former plan was a(n) ________ and his current plan is a(n) ________. Select one: A) ESOP; money purchase plan B) profit-sharing plan; ESOPC) ESOP; 401(k)D) profit-sharing plan; thrift and savings planE) ESOP; profit sharing plan

Answer 1

B. Profit-sharing plan; ESOP

Step-by-step explanation:

Based on the information given, Burt Reynolds changed his job, however, his last retirement plan was to share in the earnings of the company, while his current plan is to allow him ownership in the firm which is risky. This information provides Burt Reynolds with options.

The former retirement plan was profit-sharing, because, Burt was directly involved in the earnings of the company. Even though this plan depended on the success of the company, Burt was going to receive some rewards.

The present retirement plan is an Employee Stock Ownership Plan (ESOP). This plan provides Burt with an ownership interest in the company. This is risky because the company could fold-up before Burt retires which will leave him with nothing.

Answer 2

The correct answer is B) profit-sharing plan; ESOP

Step-by-step explanation:

Considering the situation, Burt was awarded for his good work during his time at the first company, earning him direct earnings for the results of the company. In the second case, being part of the shareholders' meeting that receives income from the placement of shares, maintains the ownership of shares by employees and each year receives the determined returns.