How may plan sponsors pay compensation?

The correct option reflects the flexibility that plan sponsors have in determining how they compensate their service providers or employees. Compensation can be structured in various ways beyond just an annual payment. Plan sponsors can choose to pay compensation on a schedule that best fits their financial planning and operational needs, which includes options such as monthly, quarterly, or any other timetable that suits their arrangement.

This flexibility allows for customized agreements that can take into account factors such as cash flow, project timelines, and the specific terms of contracts with service providers. It emphasizes the diversity of compensation strategies available to ensure that both the plan sponsors and recipients can align their financial practices with their operational realities.

Other options are limited and do not leverage the available flexibility in payment scheduling, which is essential for accommodating different business needs and financial situations.