User:Rebecca E. Harvey/Defined benefit pension plan: Difference between revisions

From Citizendium
Jump to navigation Jump to search
imported>Rebecca E. Harvey
No edit summary
imported>Rebecca E. Harvey
No edit summary
Line 1: Line 1:
A '''defined benefit pension plan''' is a type of retirement plan in which an employer allocates specific amounts for ''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'').
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 />




Line 9: Line 9:
===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 07:18, 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

Scottish

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

  1. http://www.businessdictionary.com/definition/defined-benefit-plan.html
  2. http://financial-dictionary.thefreedictionary.com/Defined-Benefit+Plan
  3. 3.0 3.1 http://www.investopedia.com/terms/d/definedbenefitpensionplan.asp
  4. 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."

Notes and links

Further reading

Selected external links