Lesson 21 Flashcards
What is a pension plan?
It is an aggrangement whereby an employer provides benefits (payments) to retired employees for services they provided in their working years.
What is a contributory pension plan?
When the employees bear part of the cost of the stated benefits or voluntarily make payments to increase their benefits.
What is a noncontributory pension plan?
The employer bears the entire cost
What is a qualified pension plan?
They are plans that offer tax benefits. They permit the deductibility of the employer’s contributions to the pension fund and tax free status of earning from pension fund assets.
The pension fund should be a separate legal and accounting entity. True or False?
True
The fund maintains a set of books and prepares financial statements.
