Explore BrainMass

Pension Plans

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

What are defined benefit and defined contribution pension plans and do companies regularly do a lot of switching between the two plans and if so why?

© BrainMass Inc. brainmass.com September 25, 2018, 1:06 am ad1c9bdddf - https://brainmass.com/business/pensions/pension-plans-141173

Solution Preview

401(K) plan (like 403(b) plans, employee stock ownership plans and profit sharing plans) is a defined contribution plan. A defined contribution plan provides an individual account for each participant. The benefits are based on the amount contributed and are also affected by income, expenses, gains and loses.

A defined benefit plan (pension plan) promises the participant a specific monthly benefit at retirement and may state this as an exact dollar ...