Question: Define the following pension fund terms: 1. Defined benefit plan 2. Defined contribution plan 3. Profit sharing plan 4. Cash balance plan 5. Vesting 6.

Define the following pension fund terms:

1. Defined benefit plan

2. Defined contribution plan

3. Profit sharing plan

4. Cash balance plan

5. Vesting

6. Portability

7. Fully funded; over funded; under funded

8. Actuarial rate of return

9. Employee Retirement Income Security Act (ERISA)

10. Pension Benefit Guarantee Corporation (PBGC)

MINI CASE

Southeast Tile Distributors Inc. is a building tile wholesaler that originated in Atlanta but is now considering expansion throughout the region to take advantage of continued strong population growth. The company has been a "mom and pop" operation supplemented by part-time workers, so it currently has no corporate retirement plan. However, the firm's owner, Andy Johnson, believes that it will be necessary to start a corporate pension plan to attract the quality employees needed to make the expansion succeed. Andy has asked you, a recent business school graduate who has just joined the firm, to learn all that you can about pension funds, and then prepare a briefing paper on the subject. To help you get started, he sketched out the following questions:

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