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NEW QUESTION: 1
A. Option D
B. Option C
C. Option B
D. Option A
NEW QUESTION: 2
A. Option C
B. Option B
C. Option D
D. Option A
NEW QUESTION: 3
Which of the following is best defined as a benefit plan that makes contributions based on a percentage of company earnings each year?
A. Money purchase plan
B. 401(k) plan
C. Target benefit plan
D. Profit sharing plan
Answer option D is correct.
The profit sharing plan makes contributions based on a percentage of employer earnings each year.
A profit sharing plan is an employee motivation plan. This plan is established and maintained by an employer. In this plan, employees receive a share of the firm's profits determined by an agreed upon formula.
Answer option A is incorrect. A money purchase plan uses a fixed percentage of employee earnings to defer compensation.
Answer option B is incorrect. The target benefit plan uses a predetermined amount, or target amount, to calculate contributions needed to reach the amount by a given date of anticipated retirement.
Answer option C is incorrect. A 401(k) plan allows contribution from employees and employers.
Reference: Professional in Human Resources Certification Study Guide, Sybex, ISBN: 978-0-470-43096-5.
Chapter Six: Total Rewards. Official PHR and SPHR Certification Guide, HR Certification Institute, ISBN:
978-1-586-44149-4, Section III, The US Body of Knowledge.
Chapter: Compensation and Benefits
Objective: Total Rewards Defined
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