Month: November 2020

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Defined Benefit Plans: What They Are and How They Work

November 24, 2020 admin Comments Off on Defined Benefit Plans: What They Are and How They Work

A defined benefit plan is an employer-sponsored retirement plan. While similar, these types of retirement plans differ from alternatives like a 401(k) or 457 plan. One of the many differences is there is a guaranteed benefit to be paid out upon retirement.
The key with these is the formula to calculate the benefit is pre-defined. Retirement payouts are formulated ahead of time. This calculation usually factors in things like how many years of employment were served, age and salary.

Each year you work for a company that provides a defined benefit plan an actuary will recalculate future benefits. This includes updating key …read more […]