Purchase Solution

defined contribution plan and a defined benefit plan

Not what you're looking for?

Ask Custom Question

1) What are the differences and similarities between a defined contribution plan and a defined benefit plan? As an employee, would you rather have a defined contribution plan or a defined benefit plan? Explain why. As an employer, would you rather offer a defined contribution plan or a defined benefit plan? Explain why.

2) What are the components of pension expense? How is the interest rate determined? Why are prior service costs amortized? How do the components of pension expense differ among the various types of contribution and benefit plans?

Purchase this Solution

Solution Summary

1) What are the differences and similarities between a defined contribution plan and a defined benefit plan? As an employee, would you rather have a defined contribution plan or a defined benefit plan? Explain why. As an employer, would you rather offer a defined contribution plan or a defined benefit plan? Explain why.

2) What are the components of pension expense? How is the interest rate determined? Why are prior service costs amortized? How do the components of pension expense differ among the various types of contribution and benefit plans?

Solution Preview

1. A defined contribution plan is a plan invested in by the employer, where the employer contributes a fixed amount annually to each employee's plan. An employee can make elective contributions to the plan also, which are taken as pre-tax deductions. This benefits the employee by reducing the amount of the employee's gross taxable pay, so they end up owing less in federal income taxes. If the plan is set up to have elective contributions taken post-tax, the gross pay isn't affected but the employee continues to reap the benefits of contributions to the plan, and is able to enjoy tax benefits when the employee begins withdrawing from the plan in retirement.

A defined benefit plan ...

Purchase this Solution


Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Operations Management

This quiz tests a student's knowledge about Operations Management

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media