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Key Differences Defined Benefit Plans vs. Defined Contribution Plans

Defined Benefits

Defined Benefit Plans

  • Larger contributions allowed on behalf of the business owner (depending on a number of factors).
  • Business funds contributions on behalf of employees.
  • Contributions generally are required each year.

Defined Contribution Plans

  • Limited contributions on behalf of business owner.
  • Plans are funded by business owner but employees have the option to contribute for themselves.
  • Annual contributions generally not required.