Determine whether each of the following independent statements best applies to a defined contribution plan (DCP), a defined benefit plan (DBP), both (B), or neither (N).
Determine whether each of the following independent statements best applies to a defined contribution plan (DCP), a defined benefit plan (DBP), both (B), or neither (N).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Determine whether each of the following independent statements best applies to a defined contribution plan (DCP), a defined benefit plan (DBP), both (B), or neither (N).
- The amount to be received at retirement depends on actuarial calculations.
2. Forfeitures can be allocated to the remaining participants’ accounts.
3. Requires greater reporting requirements and more actuarial and administrative costs.
4. May exclude employees who begin employment within five years of normal retirement age.
5. Annual addition to each employee’s account may not exceed the smaller of $57,000 or 100% of the employee’s salary.
6. The final benefit to a participant depends upon investment performance.
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