A Defined Benefit plan allows an employer to commit to pre-defined plan contributions that create the determined level of benefits for employees upon retirement. Payments normally are in the form of life annuities, which are paid to participants from the time of their retirement age to death. The Pension Benefit Guaranty Corporation (PBGC) offers insurance which guarantees defined benefit plan amounts up to a certain limit. Investments are directed by plan trustees, with the employer assuming investment risk.

Defined Benefit plans can be designed in combination with other types of retirement plans or designed with Rate Groups that allow certain employees to participate in a separate group with a differing contribution formula.

Employers with younger employees usually have lower funding requirements than plan sponsors with older groups, because the plan sponsor has more time to make the plan contributions before younger employees retire.

Please contact Associates In Excellence at 888-926-0600 if you have further inquiries regarding Defined Benefit plans.