Question

An employer is sponsoring a qualified retirement plan for its employees where the employer contributes money whenever the business has a profit. What is this type of plan called?

a. 401(k) plan
b. SEP IRA
c. Profit-sharing plan
d. Roth IRA

Answer 1

A profit-sharing plan is a type of retirement plan in which the employer contributes money whenever the business has a profit.

Step-by-step explanation:

The type of plan described in the question is called a profit-sharing plan.

A profit-sharing plan is a type of retirement plan in which the employer contributes money to the plan whenever the business has a profit. The amount of the contribution is usually based on a percentage of the company's profits. The contributions are then allocated to the employees' individual accounts, which they can access upon retirement.

Profit-sharing plans are a way for employers to provide retirement benefits to their employees while also incentivizing them to contribute to the company's success. It is a flexible plan that allows employers to vary the amount of contribution based on the profitability of the business.