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What is a defined benefit plan?

Category : Finance | Answer: 1 5 Years Ago

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A defined benefit plan, funded by the employer, promises you a specific monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement.Or, more often, it may calculate your benefit through a formula that includes factors such as your salary, your age, and the number of years you worked at the company.For example, your pension benefit might be equal to 1 percent of your average salary for the last 5 years of employment times your total years of service

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