Question

true or false: one disadvantage of a defined - contribution plan is that you dont know in advance exactly how much money you can plan on for retirement income.
○ true
○ false
question 20 2.27 pts
who bears the investment risk in a defined - contribution plan?
○ aliens
○ employee
○ employer
○ government
question 21 2.27 pts
generally, there are tax penalties for withdrawals from a traditional ira before the age of
○ 59 1/2
○ 60
○ 67, full retirement age

Explanation:

First Question (True/False)

In a defined - contribution plan, the retirement income depends on the contributions made and the investment returns on those contributions. Since investment returns are variable, the exact amount of retirement income can't be known in advance. So the statement is true.

In a defined - contribution plan, the employee makes contributions (or the employer may match, but the investment of those funds is typically managed by the employee or in an account for the employee). The investment risk, such as the risk of poor investment returns, is borne by the employee because the final retirement benefit depends on how the invested funds perform. Aliens are not relevant, the employer doesn't bear the investment risk (unlike in a defined - benefit plan), and the government also doesn't bear this risk.

For a traditional IRA, the IRS generally imposes a tax penalty for withdrawals made before the account holder reaches the age of 59 1/2. Withdrawals before this age are considered early withdrawals and are subject to a 10% penalty (in addition to regular income tax on the amount withdrawn, in most cases).

Answer:

True

Question 20