Regardless of the kind of retirement plan your company offers, it pays to know what all your options are. Here are definitions of five basic kinds of retirement plans, as broken down by the nonprofitResearch Institute.
Note: There are lots of variations on these basic plans. Your retirement benefits provider can guide you toward the options most appropriate for your organization and employees.
Defined benefit plan
This is the traditional pension your grandfather had. A defined benefit plan is usually paid in the form of an annuity. The benefit is based on a formula, typically involving salary and length of service. Private-sector defined benefit pensions are usually financed entirely by the employer.
They’re not “portable”—that is, they don’t move with an employee from job to job.
Defined contribution plan
In contrast, a defined contribution plan doesn’t guarantee any retirement benefit. Most often, contri...(register to read more)