Defined benefit plan

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Defined benefit plan
	• Refers to a retirement plan that has a quantified amount to be disbursed or paid out each year. Depending on the plan, there may be maximum and minimum benefit dollar amounts. Often, these benefits depend on years of service, age that benefits start, and possible other income constraints. Some popular plans are pensions or Social Security. Here, benefits are defined in advance but there may not be inflation or cost of living adjustments. Also, better than average investment performance does not increase the level of plan benefits. Compare to Defined Contribution Plan.
	• A pension plan in which the sponsor agrees to make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor. Related: defined contribution plan

	Embedded terms in definition
	Average Cost of living adjustment Debt Defined contribution plan Income Inflation Other income Out Pension plan Security Social security

	Related Terms
	401 k plan 403 b plan 457 plan Accumulated benefit obligation Baker plan Cost benefit ratio Death benefit Defined contribution plan Dividend reinvestment plan Employee stock ownership plan Equivalent annual benefit Financial plan Flat benefit formula Hr 10 plan Keogh plan Long term financial plan Money purchase plan Net benefit to leverage factor Overfunded pension plan Pension benefit guaranty corporation Pension plan Plan for reorganization Plan sponsors Profit sharing plan Projected benefit obligation Qualified plan Qualified savings plan Short term financial plan Underfunded pension plan Unit benefit formula Withdrawal plan

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