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Multiple Choice
In which type of investment does your employer have some control over how the money is invested?
A
Roth IRA
B
Brokerage account
C
Traditional IRA
D
Defined benefit pension plan
Verified step by step guidance
1
Understand the concept of a Defined Benefit Pension Plan: This is a type of retirement plan where the employer guarantees a specific retirement benefit amount based on factors such as salary history and years of service.
Compare the Defined Benefit Pension Plan to other investment options listed: Roth IRA, Brokerage account, and Traditional IRA. These are typically individual accounts where the employer does not have control over investment decisions.
Recognize that in a Defined Benefit Pension Plan, the employer has control over how the money is invested to ensure the promised benefits are met. This is a key distinguishing feature.
Note that Roth IRA, Brokerage account, and Traditional IRA are managed by the individual, and the employer does not influence the investment choices in these accounts.
Conclude that the Defined Benefit Pension Plan is the correct answer because it is the only option where the employer has control over the investment decisions.