Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

The concept of an age-weighted plan refers to a type of retirement plan that allocates contributions based on the age of the participants, typically favoring older employees who are closer to retirement. Age-weighted plans factor in both years of service and age, resulting in higher contributions for older participants compared to younger ones.

In this context, a profit-sharing plan can be age-weighted if it has a design that takes into account both the participants' ages and the company's profit for the period. For instance, employers can choose to allocate a larger share of the profit to older employees as a means of encouraging retirement savings for those who may not have as much time to accumulate savings. This differs from other plan types that do not emphasize participant age in their contribution calculations.

The other options represent different retirement plan structures that do not typically incorporate an age-weighted component in their core design or contribution formulas. Cash balance plans and defined benefit plans generally guarantee a specific benefit at retirement based on a formula that usually does not fluctuate based on age disparities among participants in the same manner as an age-weighted profit-sharing plan. Similarly, money purchase plans set annual contributions based on a fixed percentage of compensation rather than age considerations.