Question

Alexis is choosing between a job in the National Parks Service, which offers a pension plan, and a forestry contracting job with a 401(k) plan. Why would Alexis choose the 401(k) plan over the pension plan?

Answer 1

One advantage of the 401(k) plan over the job with the pension plan is that a pension plan is dependent on the employer in a specific way in which if the employer announced bankruptcy, the company is no longer required to pay the pensions. A 401(k) gives more security to the employer as it protects them from this situation.