Chapter 1 - Introduction to Defined Benefit Plans

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Author:
bboylegsr
ID:
234466
Filename:
Chapter 1 - Introduction to Defined Benefit Plans
Updated:
2013-09-14 13:44:27
Tags:
True False
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Description:
Introduction to Defined Benefit Plans
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  1. A cash balance plan is a type of defined benefit plan.
    True
  2. A defined benefit plan has a "unit benefit" type of formula if it provides a monthly benefit equal to 1 percent of average monthly compensation times total years of participation.
    True
  3. A defined benefit plan that provides a $500 monthly benefit to all participants has a "flat benefit" type of formula.
    True
  4. The enrolled actuary determines contribution levels for defined benefit plans so that plan assets are expected to be sufficient to pay expected benefits.
    True
  5. Since the funding of a defined benefit plan is based on the benefits provided by the plan, the amount of contribution budgeted by an employer is irrelevant when designing a defined benefit plan.
    • False -
    • The employer's ability to fund the required contribution level is of primary importance in plan design.

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