Question

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is a _____.

A) Qualified defined contribution plan
B) Thrift and savings plan
C) Profit-sharing plan
D) 401(k) plan
E) 403(b) plan

Answer 1

A profit-sharing plan is a retirement plan that promotes employee productivity and allows flexible employer contributions, differing from fixed-contribution plans like 401(k)s and 403(b)s.

Step-by-step explanation:

The employer retirement plan that is intended to promote employee productivity and allows the employer to vary the amount of annual contributions is profit-sharing. Unlike traditional pensions or other defined benefits retirement plans, which are increasingly rare, the profit-sharing plan gives the employer flexibility in deciding how much to contribute each year based on the company's earnings. Other types of plans like 401(k)s and 403(b)s are defined contribution plans where the employer contributes a fixed amount regularly. Profit-sharing plans can motivate employees by tying part of their compensation to the company's performance.