Key Differences

• Completely tax deductible.
• Defined benefit plans can be a major source of retirement income. They’re generally designed to replace a certain percentage (e.g., 70 percent) of your pre retirement income when combined with Social Security.
• Benefits do not hinge on the performance of underlying investments, so you know exactly ahead of time how much you can expect to receive at retirement.
• Most benefits are insured up to a certain annual maximum by the federal government through the Pension Benefit Guaranty Corporation (PBGC).
• Fully protected from creditors and predators.