Defined Benefit Plans

A defined benefit plan is any pension plan that is not a defined contribution plan. A defined contribution plan is any plan with individual accounts (such as IRAs, 401ks, etc.,). A pension plan that defines a benefit for an employee upon that employee's retirement is a defined benefit plan. The benefit in a defined benefit pension plan is determined by a formula that can incorporate the employee's pay, years of employment, age at retirement, and other factors. The employer has the obligation to make contributions necessary to fund the promised benefit in a defined benefit plan.