Evan is the human resource manager of a one-year-old technology company. The founder wants him to set up a retirement plan. Evan thinks the best approach during the company's early years would be a defined-contribution plan funded with profit-sharing dollars. Which statement best supports Evan's idea?

A) The plan makes employees part-owners of the company.
B) The Pension Benefit Guarantee Corporation will guarantee a basic benefit.
C) Employees can buy an annuity with the contributions when they retire.
D) The amount employees contribute is not taxed when they contribute it.
E) Contributing a share of profits gives the company more flexibility as it establishes itself.

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Candace miner · Accepted Answer

Final Answer : E, Explanation :  A defined-contribution plan funded with profit-sharing dollars gives the company more flexibility during the early years as it establishes itself. This is because the contribution amount can be adjusted based on the company's profitability, and there are no set obligations to make contributions in years where profits are low. This allows the company to conserve cash in leaner years while still offering a retirement benefit to employees.

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