Investment Dictionary

Defined Benefit (DB) Plans

A retirement plan in which by plan rules defines the benefit that will be paid to the plan participant. The plan sponsor is required to fund the plan based on an actuary\'s calculations in the amount that will provide the promised benefit. Most people call these plans \"Pensions\". TRS is a DB plan because it provides a defined benefit (Yrs of Service X Avg Salary X 2.3%). Typically a DB plan will have vesting requirements and then provide an annuity payment for the life of the recipient.

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