What is a major benefit of defined contribution plans regarding portability?

The major benefit of defined contribution plans regarding portability is the ability to transfer funds without penalties. This characteristic is particularly important for employees who may change jobs throughout their careers. Defined contribution plans, such as 401(k)s, allow individuals to roll over their account balances into another qualified retirement plan or an Individual Retirement Account (IRA) when they leave a job. This means that employees can maintain their retirement savings without incurring taxes or early withdrawal penalties, thereby preserving the value of their investments and ensuring continuity in their retirement savings strategy.

While some of the other options may touch on aspects of retirement plans, they do not directly address the portability benefit of defined contribution plans. Tying a plan to employment termination does not emphasize portability, but rather speaks to the constraints that can arise from leaving a job. Guaranteed fund growth is more associated with defined benefit plans and does not relate to the transferability of assets. Immediate access to funds may not be available in many defined contribution plans, especially if participants wish to avoid penalties and taxes. Therefore, the ability to transfer funds without penalties stands out as a significant advantage in the context of job mobility and personal financial planning.