In a defined contribution plan, an employer only recognizes pension expense for the amount that the employer is required to contribute under the plan.

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In a defined contribution plan, the employer's obligation is to make contributions to the plan on behalf of the employees. Therefore, the employer only recognizes a pension expense for the amount of contributions that are required under the plan. The investment earnings or losses on those contributions are passed on to the employees as part of their individual account balances.

In a Defined Contribution Plan, an Employer Only Recognizes Pension