Employers that want to shelter more than the annual defined contribution limit may want to consider a defined benefit plan since contributions can be substantially higher, resulting in a faster accumulation of retirement funds.
+ Defined Benefit Plans
A defined benefit plan promises the employee a specific monthly benefit payable at the retirement age specified in the plan. The employer is responsible for contributing enough funds to the plan to pay the promised benefits, regardless of profits and earnings.
+ Cash Balance Plans
A cash balance plan is a type of defined benefit plan that resembles a defined contribution plan. For this reason, these plans are referred to as hybrid plans. A cash balance plan looks like a defined contribution plan because the employee's benefit is expressed as a hypothetical account balance instead of a monthly benefit.
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