- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 8. Topics in Long-Term Liabilities and Equity
- Subject 5. Financial Reporting for Post-Employment and Share-Based Compensation Plans
CFA Practice Question
Select the correct statement(s).
II. only employer contributions are defined.
III. both employee and employer contributions are defined.
IV. either employee or employer contributions are defined.
In defined contribution plans, ______
I. only employee contributions are defined.
II. only employer contributions are defined.
III. both employee and employer contributions are defined.
IV. either employee or employer contributions are defined.
Correct Answer: II only
User Contributed Comments 6
| User | Comment |
|---|---|
| HenryQ | Employee has a cap for contribution, is that considered defined? |
| AusPhD | No, and by the way in a lot of jurisdictions there is no cap on employee contributions. |
| johntan1979 | If you are referring to contribution deferral limits, yes, there is a cap. It is $17,000 for 2012. |
| johntan1979 | $17,500 for 2013 |
| akirchner1 | I believe this question is referring to the contribution defined in the plan itself. We know what the employer is going to contribute because it's defined in the plan. For example, 50% of what the employee contributes up to 6% of employee's salary. Sure, there is a cap on how much the employee can contribute, but there is no defined amount under that cap that the employee has to contribute. |
| davidt876 | i agree with akirchner, 'defined' here, seems to mean 'required' |