What is the difference between defined benefit and defined contribution?

A defined benefit plan is the responsibility of the employer, while the employee takes responsibility for a defined contribution plan. We’ll discuss the differences as well as the pros and cons. A financial advisor can help you get a handle on options for saving for retirement.

What is a defined contribution plan?

Defined contribution plan s are employer-sponsored retirement plans where money is put in regularly over time, either by you or your employer. Common types of defined contribution plans where employees do most of the contributing include 401 (k)s, 403 (b)s and 457 (b)s. These can be supplemented with employer contributions as well.

What is a defined benefit plan?

A defined benefit plan is an employer-sponsored retirement plan that provides qualifying employees with a guaranteed payout in retirement. It's an alternative to a defined contribution plan, which gives employees more control over account contributions but requires them to take on more risk and doesn't provide a guarantee of a certain payout.