Defined Benefit Plan
A defined benefit (DB) plan is a traditional pension-style retirement plan that promises a benefit based on a formula (often using years of service and compensation). Unlike 401(k)-style plans, the employer typically bears most investment and funding risk.
The core idea (in plain English)
Instead of you building a personal account balance, the plan promises a future income stream. The employer and actuaries manage contributions and investments to fund that promise.
How benefits are commonly paid
- Often as a lifetime monthly payment (annuity).
- May include survivor benefit options for a spouse.
Choosing a joint-and-survivor pension option may lower your monthly payment but can continue payments for a surviving spouse.
If you have a DB pension, it can act as an income floor in retirement — coordinate other savings around it rather than duplicating conservative income needs.
Educational only. Always confirm eligibility, limits, and plan rules with IRS guidance or plan documents.