What type of plan allows employees to choose from a variety of benefits?

A cafeteria plan is designed to give employees the flexibility to choose from a range of pre-tax benefits that best suit their individual needs and preferences. This type of plan allows employees to tailor their benefits package, selecting from various options such as health insurance, retirement savings plans, dependent care assistance, and more. The name "cafeteria plan" reflects the idea of allowing employees to "choose" what they want from a menu of benefits, much like picking food from a cafeteria’s selection.

Cafeteria plans are particularly beneficial because they cater to the diverse needs of a workforce, allowing for personal choice and catering to different life circumstances and financial situations among employees. This not only enhances employee satisfaction and retention but can also provide tax advantages for both the employer and employee.

The other options represent specific types of benefit plans or retirement savings plans that do not offer the same level of customization or choice for employees. For instance, a defined benefit plan provides a predetermined retirement benefit based on salary and years of service, lacking flexibility. A 403(b) plan is a tax-advantaged retirement savings plan for certain employees of public schools and non-profit organizations and is limited to retirement savings. In contrast, an Employee Stock Ownership Plan (ESOP) is a program