User:Rebecca E. Harvey/Defined benefit pension plan: Difference between revisions
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A '''defined benefit pension plan''' is a type of retirement plan in which an employer allocates specific amounts for | A '''defined benefit pension plan''' is a type of retirement plan in which an employer allocates specific amounts of money for participating, vested employees in a tax deferred account.<ref>http://www.businessdictionary.com/definition/defined-benefit-plan.html</ref> The plan is "defined" because the formula for calculating the amount contributed by an employer is known in advance. Differing from a [[defined contribution plan]], the benefits a retiree receives from a defined benefit plan (commonly referred to as a ''DB plan'') are not dependent on the success or failure of the portfolio in which the employer's contributions are invested.<ref>http://financial-dictionary.thefreedictionary.com/Defined-Benefit+Plan</ref> This distinction places the entire liability of economic market flucuations and the particular portfolio's performance on the employer (or the ''plan sponsor''). The benefit a participating employee (or a ''participant'') will receive is traditionally calculated based on length of employment and terminal wages.<ref name=Investopedia>http://www.investopedia.com/terms/d/definedbenefitpensionplan.asp</ref> In some instances, the management level of a participant will also factor into the calculation. Because of the plan's tax-deferred status, there are restrictions on how early benefits can be received.<ref name=Investopedia /> | ||
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===Unit benefit plan=== | ===Unit benefit plan=== | ||
===Variable benefit plan=== | ===Variable benefit plan=== | ||
===Qualified plan=== | |||
===Non-qualified plan=== | |||
article and before a bibliography.<ref name=Smith>''Chicago Manual of Style'', 14th ed., Part 1, see section 1.82, "Back Matter." This edition of the Chicago Manual of Style discusses the construction of a "book."</ref> | article and before a bibliography.<ref name=Smith>''Chicago Manual of Style'', 14th ed., Part 1, see section 1.82, "Back Matter." This edition of the Chicago Manual of Style discusses the construction of a "book."</ref> | ||
in the text by using <ref name=Smith /> | in the text by using <ref name=Smith /> | ||
Revision as of 06:18, 29 October 2010
A defined benefit pension plan is a type of retirement plan in which an employer allocates specific amounts of money for participating, vested employees in a tax deferred account.[1] The plan is "defined" because the formula for calculating the amount contributed by an employer is known in advance. Differing from a defined contribution plan, the benefits a retiree receives from a defined benefit plan (commonly referred to as a DB plan) are not dependent on the success or failure of the portfolio in which the employer's contributions are invested.[2] This distinction places the entire liability of economic market flucuations and the particular portfolio's performance on the employer (or the plan sponsor). The benefit a participating employee (or a participant) will receive is traditionally calculated based on length of employment and terminal wages.[3] In some instances, the management level of a participant will also factor into the calculation. Because of the plan's tax-deferred status, there are restrictions on how early benefits can be received.[3]
Calculation of defined benefit pension plans
Types of defined benefit plans
Flat benefit plan
Unit benefit plan
Variable benefit plan
Qualified plan
Non-qualified plan
article and before a bibliography.[4] in the text by using [4]
Types of payouts available
Management of defined benefit plans
Federal retirement laws
Investment strategies
Benefits
Criticisms
Related pension plans
Cash Balance Plan
Money Purchase Plan
References
- ↑ http://www.businessdictionary.com/definition/defined-benefit-plan.html
- ↑ http://financial-dictionary.thefreedictionary.com/Defined-Benefit+Plan
- ↑ 3.0 3.1 http://www.investopedia.com/terms/d/definedbenefitpensionplan.asp
- ↑ 4.0 4.1 Chicago Manual of Style, 14th ed., Part 1, see section 1.82, "Back Matter." This edition of the Chicago Manual of Style discusses the construction of a "book."