defined-benefit pension plan

Defined-Benefit Plan

A retirement plan in which the retiree receives a set amount in benefits each month once he/she begins receiving benefits. That is, the benefits the retiree receives are not dependent on the performance of the portfolio in which the contributions are invested; the company sponsoring the plan assumes the entire liability. The amount of the benefit is determined according to some formula that usually accounts for the amount of contributions and the length of time the retiree worked for the company. The disadvantage to a defined-benefit plan, from the company's perspective, is the possibility that the investment portfolio will not perform as expected, forcing the company to make payments from its earnings, or, worse, to borrow money. See also: Defined-contribution plan.

defined-benefit pension plan

A pension plan in which retirement benefits rather than contributions into the plan are specified. Thus, a retired employee who has reached a certain age with a given number of years of service and has earned a certain income is entitled to a specific monthly pension payment.
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Because it is a defined-benefit pension plan, the employee can choose to receive a lump-sum payment (preferred by most employees) or an annuity.
Cash balance pension plans: do they discriminate against older employees?
It elected to close out its defined-benefit pension plan, which it did in 2004, and roll out a new defined-contribution plan; that started with new employees, then 60-90 days later with the rest of the employee base.
Pensions: automatic enrollment in 401(k)s pushed
The estate's major asset was a defined-benefit pension plan.
Estate planning with pensions
REFLECTIONS: ERISA Section 204(h), as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001, provides that a defined-benefit pension plan may not be amended to provide a significant reduction in the rate of future benefit accrual, unless the plan administrator provides notice describing the reduction to each individual whose benefit is adversely affected and to each employee organization representing these individuals; the plan is subject to an excise tax under Sec.
Merger of pension plan into profit-sharing plan is not partial termination
This may include knowing what optional forms of benefits are available under a plan's terms as well as devising an appropriate formula for dividing the benefits of a defined-benefit pension plan.
Valuing pension benefits in divorce: look before you leap
Redefining pension benefits for new teachers using a cash-balance approach serves the practical needs of existing defined-benefit pension plans.
Redefining Teacher Pensions: Strategically Defined Benefits for New Teachers and Fiscal Sustainability for All
About half of the legislation deals with traditional defined-benefit pension plans, but other parts discuss the more popular defined-contribution plans and IRAs, which affect more taxpayers than do the traditional pension rules.
PPA '06 addresses more than pensions
1 million American workers and retirees in 30,330 private single-employer and multi-employer defined-benefit pension plans.
Ask FERF about ... the Pension Protection Act of 2006

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