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DB(k) Plan

Source: Investopedia
This Article has been Edited for Accessibility

DB(k) Plan

What is 'DB(k) Plan'

A retirement plan that combines some of the characteristics of a 401(k) plan with those of a defined benefit (DB) plan. Funds can be voluntarily contributed to the DB(k) plan just as they can with a 401(k) plan, with the employer retaining the option to match the funds up to a certain percentage. Upon retirement, the employer will also pay the employee a small percentage of his or her salary, which is similar to a traditional pension.

The DB(k) plan was included in the Pension Protection Act of 2006.

Explaining 'DB(k) Plan'

The DB(k) plan was designed to provide businesses with a way to attract employees, since many investors worry that their entire savings could be wiped out in a down market. Retaining the pension characteristic means that the retiree will still have a source of income, regardless of the performance of the 401(k) portion of the plan.

Additional Resources

  1. Behavioral Economics Perspectives On Public Sector Pension Plans []
  2. Defined Contribution Plans, Defined ... []
  3. Contributions To Defined Contribution Pension Plans []
  4. Defined Contribution Plans, Defined Benefit Plans ... []
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