Question

All of the following characterize cash balance plans EXCEPT ________.

1) lacks portability
2) offers predictable benefits
3)onsidered hybrid pension plans
4) employees earn interest on contributed amounts

Answer 1

Cash balance plans offer predictable benefits, are considered hybrid pension plans, and employees earn interest on contributed amounts.

Step-by-step explanation:

All of the following characterize cash balance plans EXCEPT lacks portability: Cash balance plans do not lack portability. These plans are portable, meaning that if an individual takes a job with a different employer, their cash balance plan can be transferred. Cash balance plans offer predictable benefits: One characteristic of cash balance plans is that they offer predictable benefits. These plans define the benefit as an account balance, which is easier for participants to understand and project. Cash balance plans are considered hybrid pension plans: Cash balance plans are indeed considered hybrid pension plans. These plans combine elements of defined benefit and defined contribution plans. Employees earn interest on contributed amounts: One of the key features of cash balance plans is that employees earn interest on their contributed amounts. The interest is typically guaranteed to be at a minimum rate specified in the plan.