Defined Benefit Pension Plan
A Defined Benefit Pension Plan (DBPP) is an investment vehicle in which an employee’s retirement income is based on a predetermined formula involving earnings and years of service. It provides the employee with an idea of what income they are to expect when they retire. Members receive annual statements indicating the benefits on their retirement date.
Who is eligible?
- Eligibility in a DBPP is usually to the discretion of the employer. Typically, it is determined by a certain period of time worked or amount of earned
What are typical contributions? Are there any limits?
- Typically, contributions are made on behalf of the employer; however, employee contributions are not uncommon
- There are minimum and maximum contribution limits
Who is responsible for investments?
- The employer controls the funds by pooling them into one investment.
- Employees have no active involvement
Are there any withdrawal restrictions?
- Employees are not allowed to withdrawal their funds until retirement
Call us today to learn more about Defined Benefit Pension Plans.