Series 7: 16.1.1. Defined Benefit Plan

16.1.1. Defined Benefit Plan

A defined benefit plan is a qualified plan where the employer promises to pay each eligible employee a specific periodic (usually monthly) benefit for life, starting at retirement. The most common example of the defined benefit plan is the pension plan. These plans are typically funded and managed by the company or organization that employs the participant. Therefore, all the investment decisions are made by the employer, and it is the employer’s responsibility to make sure that enough money is set aside for its employees’ retirements.

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