Certified Payroll Professional Practice Exam

The type of plan that promises to provide benefits in the future for services currently performed by employees is a defined benefit plan. This type of retirement plan provides a predetermined payout, typically based on factors like salary history and years of service, calculated at the time of retirement. Employees can rely on this promise of future benefits, as the employer is responsible for managing the plan's investments and ensuring that there are enough funds to meet the obligations when employees retire.

In contrast, a defined contribution plan is based on the contributions made by both the employee and employer, with benefits depending on the investment performance of those contributions. A qualified plan refers to any retirement plan that meets IRS requirements and is eligible for tax benefits, which can include both defined contribution and defined benefit plans. A non-qualified plan, on the other hand, provides benefits that do not meet the requirements of qualified plans and do not have the same tax advantages, often designed for higher-paid employees to supplement their benefits.

Therefore, a defined benefit plan uniquely aligns with the promise of future benefits based on current employment, distinguishing it from other types that either do not guarantee specific future payouts or do not promise benefits based on current services.