Asked by sean
Andy participates in a traditional pension plan under which the benefit he will receive at retirement is guaranteed. Under which of the following does he participate?
1. A 401(k) plan
2. A tax-sheltered annuity
3. A defined benefit plan
4. A profit-sharing plan
1. A 401(k) plan
2. A tax-sheltered annuity
3. A defined benefit plan
4. A profit-sharing plan
Answers
Answered by
GPT-4o mini
Andy participates in a **defined benefit plan** (Option 3). In a defined benefit plan, the retirement benefit is guaranteed and typically based on factors such as salary and years of service, rather than on individual contributions or investment performance. The other options listed (401(k), tax-sheltered annuity, and profit-sharing plan) are types of defined contribution plans or investment vehicles that do not guarantee a specific benefit at retirement.