Small Business Retirement Savings Advisor

Defined Benefit

There are two general types of benefit plans, Defined Benefit and Defined Contribution. A Defined Contribution Plan carries no promise of a fixed amount upon retirement and depends upon contributions and how much they grow until retirement.

A Defined Benefit Plan is designed to provide each participant with a fixed income at retirement. Defined Benefit Plans are based on a computation of what contributions are needed to provide a fixed pre-established benefit to plan participants at retirement. Generally, it sets a regular monthly benefit for your lifetime.

Actuarial assumptions and compilations are required to figure these contributions and an employer usually needs professional help to start and maintain a Defined Benefit Plan.

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