SIE Exam Question 973: Answer and Explanation

Question: 973

In which of the following qualified retirement plans are the employees responsible for the investment risk?

(1) Money purchase plans

(2) Target benefit plans

(3) Defined benefit plans

(4) Cash balance plans

• A. (1) and (3) only
• B. (1) and (2) only
• C. (2) and (3) only
• D. (3) and (4) only

Correct Answer: B

Explanation:

The employee assumes the investment risk in a defined contribution plan. Money purchase plans and target benefit plans are types of defined contribution plans.