SIE Exam Question 879: Answer and Explanation

Question: 879

Which of the following is/are correct regarding investment risk in a qualified retirement plan?

(1) In a defined contribution plan, the employer bears the investment risk.

(2) In a defined benefit plan, the employee bears the investment risk.

• A. (1) only
• B. (2) only
• C. Both (1) and (2) are correct.
• D. Neither (1) or (2) are correct.

Correct Answer: D

Explanation:

In a defined contribution plan, the employee bears the investment risk. In a defined benefit plan, the employer bears the investment risk.