Which of the following is NOT an example of a defined contribution plan?

• A. 403(b) plan
• B. Profit-sharing plan
• C. Pension plan with a guaranteed benefit formula
• D. 401(k) plan

Answer: (C)

Verified step by step guidance

1. Understand the difference between a defined contribution plan and a defined benefit plan. A defined contribution plan specifies the amount of contributions made by the employer and/or employee, but the final benefit depends on the investment performance. Examples include 401(k), 403(b), and profit-sharing plans. A defined benefit plan, on the other hand, guarantees a specific benefit amount upon retirement, regardless of investment performance.
2. Review the characteristics of each plan mentioned in the question: 403(b) plan, profit-sharing plan, pension plan with a guaranteed benefit formula, and 401(k) plan.
3. Identify that a 403(b) plan is a type of defined contribution plan typically offered by non-profit organizations, where contributions are made to individual accounts.
4. Recognize that a profit-sharing plan is also a defined contribution plan, where employers contribute a portion of their profits to employees' retirement accounts.
5. Note that a pension plan with a guaranteed benefit formula is a defined benefit plan, as it guarantees a specific retirement benefit based on factors like salary and years of service. This makes it the correct answer to the question, as it is NOT a defined contribution plan.