CFA Practice Question

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CFA Practice Question

Who normally makes the contributions to a defined benefit plan?

A. Independent third party
B. Employee
C. Employer
D. Both employee and employer
Correct Answer: C

User Contributed Comments 4

User Comment
PHawk That's funny. Maybe CFA could explain the deductions from my paycheque for my DBP. Mine is 50/50 employer/employee funded. When the unfunded pension liability was increased, so did my monthly contributions off my paycheque.
farhan92 might not be a DB plan buddy...
Pllam3 The answer is not correct technically. In U.S., employees contributions to DB plans are not tax deductible (only employer contribution are deductible) so this explains why most plans in U.S. (Not all plans) do not have employees contributions (this is not the case for U.S. defined contribution plans where employees contributions are tax deductible). However, in Canada for example, rules are differents and employees contributions to DB plans are tax deductible so most DB plans have employees contributions.
ange Therefore employers "normally" make contribution to DBP.
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