CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Select the correct statement(s).

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'
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