Defined-benefit-plan meaning

A type of retirement plan that is committed to paying a specified amount to a recipient based on years of employment and annual salary. The plan may be funded by employees’ contributions, employer’s contributions, or a combination of the two. The employer has the responsibility to see that the plan is solvent. An employer can contribute the amount of money needed to provide an annual benefit that is no larger than the smaller of $140,000 or 100 percent of the employee’s average taxable compensation (as of this printing) for his or her most highly paid three consecutive years.
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