SIE Exam Question 819: Answer and Explanation

Question: 819

Dr. Jones, age 29, recently opened a successful dental practice. She's concerned that her young employees will leave for a more experienced dental practice once they're fully trained. In order to retain her young employees, which retirement plan should Dr. Jones adopt?

• A. Cash balance plan
• B. Defined benefit plan
• C. Money purchase plan
• D. Target benefit plan

Correct Answer: C

Explanation:

The cash balance plan, defined benefit plan, and target benefit plan all favor older employees. Money purchase plans guarantee a contribution will be made each year and will help Dr. Jones achieve her goal of retaining her young employees.