Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Question

Irvin Pittman

Business

10 January, 08:13

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

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Answers (1)

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Makena Brady · Answer 1

The given excerpt is Defined benefit plan.

Explanation:

Retirement plans are a mechanism to define pension income goals and the steps and actions needed to achieve those objectives. Retirement planning covers the identification of income sources, projections of expenditures, the creation of a savings system and the control of assets and risks.

An employer-sponsored pension plan is a fixed package of benefits for workers calculated a formula that uses takes account of many factors, such as the length of jobs and the history of salaries.

Portfolio control and investment risk are handled by the client in the strategy. There are also limitations when a worker can withdraw money without any penalties and with what technique. The benefits paid are usually guaranteed for life and slightly higher to account for higher living costs.