Question

Which of the following types of defined contribution plans will most likely involve an employer matching the employee contributions to some degree?

a) 401(k) Plan
b) Roth IRA
c) SEP IRA
d) SIMPLE IRA

Answer 1

A 401(k) Plan and SIMPLE IRA are defined contribution plans where employers are most likely to match employee contributions. 401(k)s are portable and help protect retirement savings from inflation.

Step-by-step explanation:

Among the types of defined contribution plans mentioned, an employer is most likely to match the contributions partially or fully in a 401(k) Plan and a SIMPLE IRA. While a Roth IRA is typically an individual account without employer matching, and a SEP IRA is generally used by self-employed individuals or small business owners to contribute toward their own and their employees' retirements but not on a matching basis.

Defined contribution plans such as 401(k)s allow for employer contributions and offer investment vehicles that are tax-deferred. These plans are also portable, meaning employees can take their 401(k) with them if they change employers. The investments made can generate real rates of return, protecting against inflation costs that affect traditional pensions.