Series 7 practice questionmediumRetirement Plans 378
A 401(k) plan is best described as:
- Aa municipal bond escrow account
- Ban IRA only for self-employed individuals
- Ca defined benefit pension formula
- Dan employer-sponsored defined contribution retirement plan✓ Correct answer
Explanation
Why D — an employer-sponsored defined contribution retirement plan
A 401(k) is an employer-sponsored defined contribution plan that often permits employee salary deferrals and employer matching. The account balance varies with contributions and investment performance.
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