Ascertain whether each of the following independent statements is best applied to a defined contribution plan (DCP), a defined benefit plan (DBP), Both (B), or neither (N).
Explanation of Solution
Defined contribution plans: In a defined contribution plan, the additions made to an employee’s account annually cannot exceed the lesser;
- “$56,000 (during 2019)”, (or)
- “100 percent of the compensation made by the employees”.
Defined Benefit plans: In a defined benefit plan, the annual benefit paid to an employee is restricted to the lesser of the following;
- “$225,000 (in 2019)” or
- “100% of the average compensation for the highest three years of employment”.
Ascertain whether each of the following independent statements is best applied to a defined contribution plan (DCP), a defined benefit plan (DBP), Both (B), or neither (N).
Serial Number | Applied to the best of |
a. | DBP. |
b. | DCP. |
c. | DBP. |
d. | N. |
e. | DBP. |
f. | B. |
g. | N. |
h. | DCP. |
i. | DCP. |
j. | DBP. |
Table (1)
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