A cash balance retirement plan is a defined benefit plan that has some characteristics of a defined contribution plan, such as portability. The pension benefit accrues over time from contributions, based on a percentage of your current pay, which are credited to a hypothetical account in your name.
is a hybrid plan that has an account like that of a defined contribution plan. Annual investment credits are added to the account, however the employer guarantees that employee account balances will earn interest at a specified rate. Retirement benefits are not calculated on a formula, but like a defined contribution account, whatever amount is in the fund represents your retirement account.
A defined benefit plan in which each participant has an account that is credited with a dollar amount that resembles an employer contribution, generally determined as a percentage of pay. Each participant's account is credited with earned interest. The plan provides the benefits in the form of a lump-sum distribution or annuity.
see account balance plan.
A type of defined benefit pension plan that uses a formula that is different from a traditional plan to determine benefits. The plan is considered a defined benefit plan because the employer bears the investment risks and rewards and the mortality risk if the employee elects to receive benefits in the form of an annuity.
A defined benefit plan in which each participant has an account that is credited with an amount, usually a percentage of pay. Benefits are distributed in a lump sum or as an annuity.
A cash balance plan is a defined benefit retirement plan that maintains hypothetical individual employee accounts like a defined contribution plan. The hypotheticality of the individual accounts was crucial in the early adoption of such plans because it enabled conversion of traditional plans without declaring a plan termination.