Question
Asked Jan 22, 2020
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Determine the meaning of the following terms.
(a) Contributory plan.
(b) Vested benefits.
(c) Retroactive benefits.
(d) Years-of-service method.

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Expert Answer

Step 1

Plan assets: Assets which are created, maintained and planned for a specific purpose or benefit is termed as plan asset. The contribution of both the employer and beneficiary is encouraged by the management and maintained by the officer appointed for pension planning. These contributions are distributed to various investments which yield good rate of return.

Step 2

Explain the given terms:

a. Contributory plan:

A plan through which the employees or beneficiary contribute to the pension fund created, maintained and recorded by the pension fund agencies. This contribution includes employer contribution too.

b. Vested benefit:

A future rece...

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Accounting

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