ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Once common, pensions in the private sector are rare and have been replaced by 401(k)s. The shift to 401(k)s has placed the burden of saving and investing for retirement⁠-and the risk involved⁠-on employees.

Detailed explanation-2: -Defined contribution plans: These are now the most common type of workplace retirement plan. Employers set up these plans, such as 401(k)s and 403(b)s, to enable employees to contribute to an individual account within the company plan-typically via payroll deduction.

Detailed explanation-3: -A 401(k) plan is a qualified plan that includes a feature allowing an employee to elect to have the employer contribute a portion of the employee’s wages to an individual account under the plan. The underlying plan can be a profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan.

Detailed explanation-4: -Annuity Plans With deferred plans, you invest a lump sum amount or make regular payments for a fixed duration. The annual or monthly annuity is only received after a particular term. The annuity payment can be either for a fixed period or for a lifetime in both the plans.

Detailed explanation-5: -401-k; pension plan; pension account; retirement plan; retirement savings plan; retirement savings account; retirement account; retirement program.