Qualified Plans
In which plan does the participant rather than the employer bear the investment risk?
Answer and explanation
Answer: C. In a defined contribution plan the retirement benefit is whatever the account is worth, so investment results fall on the participant. In a defined benefit plan the employer has promised a stated benefit and must fund it whatever the investments do. A trustee holds assets in both but does not absorb the risk.Source: IRS Publication 560 — Pub 560, Who bears the investment risk
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