Which type of retirement plans are subject to contribution limits?Select one:a.Only defined contribution plansb.Only defined benefit plansc.Neither defined benefit nor defined contribution plansd.Both defined benefit and defined contribution plans

Answered: Which type of retirement plans are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which type of retirement plans are subject to contribution limits?

Select one:

Only defined contribution plans

Only defined benefit plans

Neither defined benefit nor defined contribution plans

Both defined benefit and defined contribution plans

Expert Solution

Step 1

Defined contribution plans refers to the plan under which both the employee and employer contribute towards the funds a specific percentage of the employee salary each month.

Defined benefit plan refers to the plan under which the employer alone contributes some amount towards the fund for each year of completed service of employee

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Employee Retirement Income Security Act (ERISA)

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