Certified Plan Sponsor Professional (CPSP) Practice Exam

What types of plans are specifically designed to receive company stock?

1. Cash balance plans, money purchase plans, and pension plans

2. Stock purchase plans, employee stock ownership plans, and stock bonus plans

3. Defined benefit plans, defined contribution plans, and hybrid plans

4. 401(k) plans, IRA accounts, and Roth plans

The correct answer is: Stock purchase plans, employee stock ownership plans, and stock bonus plans

The answer highlights that stock purchase plans, employee stock ownership plans, and stock bonus plans are specifically structured to hold and manage company stock. Each of these types of plans has a unique focus on facilitating employee ownership of the company's stock, which can provide employees with additional retirement benefits tied directly to the performance and growth of their employer. Stock purchase plans allow employees to buy shares of the company's stock at a reduced price, often through payroll deductions. Employee stock ownership plans (ESOPs) are trust-based arrangements that encourage employees to become shareholders, generally forming part of their retirement funds. Stock bonus plans award employees with shares of the company's stock as a form of compensation, often tied to performance or tenure. The other options listed do not specifically focus on receiving or holding company stock in the same manner. Cash balance plans and traditional pension plans primarily deal with defined benefits rather than stock investment. Defined contribution plans, while they can allow for investments in stock-based mutual funds, are not specifically designed for holding company stock. Additionally, 401(k) plans and IRAs can include a range of investment options, but they are not solely focused on company stock like the options in the correct answer.