Chapter 4

Defined Benefit Plan Types and Money Purchase Pension Plans

Introduction

Data from the Bureau of Labor Statistics confirms that an employee is nearly twice as likely to have access to a defined contribution (DC) plan as to have access to a defined benefit (DB) plan.1 Why is that? Here is a hint…the answer directly relates to an employer’s responsibilities and potential liabilities under both plan types. In Chapter 4, you will read about the various types of DB plans and why each might be chosen by an employer. You will also see the different formulas that could be used to calculate a certain benefit level within a DB plan. You will also be introduced to money purchase pension plans (MPPPs) and find out why they are not exceptionally ...

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