3
AssignmentMultiple Choice

Employment, Entrepreneurship, and Compensation

Question 3 • FL-2102373-Personal Finance and Money Management Honors

Which statement accurately compares pension and 401(k) plans?

Answer
A
Pension plans are employer-sponsored; 401(k) plans are employee-sponsored.
B
Both pension and 401(k) plans require employee contributions.
C
Pension plans are employer-controlled; 401(k) plans are employee-controlled.
D
Both pension and 401(k) plans are common in the public sector.

Explanation

A pension plan generally promises a retirement benefit set by the employer, which manages the plan and its investments. In a 401(k), employees choose how much to contribute and typically select investments from options offered by the plan, so it is more employee-controlled. Therefore, the accurate comparison is that pension plans are employer-controlled while 401(k) plans are employee-controlled.

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