Part 1

Identify and discuss the characteristics of other post-retirement benefit plans and discuss how they are similar and different from defined benefit pension plans. In addition, discuss how the accounting methods differ for other post-retirement plans and defined benefit pension plans.

Part 2

Identify and discuss the special tax treatment of pension plans and what qualifies a pension plan for these tax benefits.

Answer preview

Part 1

Defined benefit pension plans constitute an amount of pension set in advance calculated using a specific formula. The formula used corresponds to a percentage of the employees’ year of service. Defined contribution pension plan, on the other hand, constitutes pension amount from a pension fund where the employee was making certain contributions throughout their employment period. One characteristic of the defined contribution pension plan is that the…

 

(450 words)