Section 16.5 Defined Benefit Plan

• Library: Family Law Deskbook and 2014 Supp

b. (§16.5) Defined Benefit Plan

A “defined benefit” plan is a qualified deferred compensation arrangement whereby the employer “defines” the interest to be paid at retirement, rather than the amount of money contributed today. In this type of plan, the amount of money currently contributed to the plan by the employer is an amount that would fund payment of a predetermined retirement benefit at the normal retirement age of the employee/participant. As a result, the determination of the amount of the employer’s contribution to
the plan is, in part, a function of the age, and compensation level, of each participant. This determination is typically made with the aid of actuaries. Defined benefit plans are most commonly found in the form of pension plans, which typically promise a specified benefit that is...