Which type of retirement plan maintains an individual account for each covered person?

The correct answer is defined contribution plan because this type of retirement plan is structured to maintain an individual account for each participant. In a defined contribution plan, such as a 401(k), both the employee and the employer can make contributions, and the account balance depends on the amount contributed and the investment performance over time. Each participant owns their account and can track their contributions and investment changes directly.

In contrast, a defined benefit plan provides a fixed benefit at retirement, which is calculated based on a formula considering factors like salary history and years of service, but it does not maintain an individual account for each employee in the same way. An employer pension plan typically refers to defined benefit plans and may not specify individual accounts. A traditional IRA, while it does maintain an individual account, is a personal retirement account rather than a plan offered by an employer to multiple employees. Thus, defined contribution plans are distinctly characterized by their individual account structure.