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In a defined contribution plan, a formula is used that: Ensures that pension expense and the cash funding will be different Requires an employer to contribute a certain sum each period based on the formula

In a defined contribution plan, a formula is used that: Ensures that pension expense and the cash funding will be different Requires an employer to contribute a certain sum each period based on the formula

Individual Income Taxes
Individual Income Taxes
43rd Edition
ISBN:9780357109731
Author:Hoffman
Publisher:Hoffman
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 2DQ
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In a defined contribution plan, a formula is used that:

  • Ensures that pension expense and the cash funding will be different
  • Requires an employer to contribute a certain sum each period based on the formula
  • Defines the benefits that the employee will receive at the time of retirement
  • Ensures that the employer is at risk to make sure funds are available at retirement
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