Which of the following statements is (are)true regarding cash-balance pension plans?
I.Cash balance plans are defined contribution plans.
II.Under a cash balance plan,the employer creates an investment account for each employee into which the employer makes actual contributions and allocates investment gains and losses.

Question

Quizplus · Accepted Answer

Cash balance plans are a type of defined benefit plan, not defined contribution plans, and they provide hypothetical (not actual) individual accounts for employees. The employer credits the employee's account with a set percentage of their yearly compensation plus interest charges.

Which of the Following Statements Is (Are)true Regarding Cash-Balance Pension