A defined benefit plan differs from a defined contribution plan in that a defined benefit plan
A)has a liability that must be actuarially computed.
B)is required by ERISA.
C)requires a corporation to make a series of payments of a specified amount to a pension fund.
D)requires journal entries, and the defined contribution plan does not.

Question

Quizplus · Accepted Answer

A defined benefit plan requires the employer to pay a specific amount of retirement benefit to the employees based on a formula that takes into account factors such as salary history and years of service. Therefore, the liability of the employer must be actuarially computed. In contrast, a defined contribution plan requires the employer to contribute a set amount to the employee's retirement account, with no guarantee of the final benefit amount.

A Defined Benefit Plan Differs from a Defined Contribution Plan