Defined Benefit Plans
A Defined Benefit Plan is a plan for which benefits tomorrow are defined.
A Defined Benefit Plan is a plan for which benefits tomorrow are defined. It is not an individual account plan. All plan assets must be pooled. A Defined Benefit Plan doesn’t maintain account balances to reflect participants’ accrued benefits. Participants’ accrued benefits are determined by a formula stated in the Plan Document, which generally takes compensation and service into consideration. The annual contribution is calculated by an Enrolled Actuary. The contribution is an obligation on the part of the employer and can change from year to year. The employer bears the investment risk.