Hybrid plan resembling a DC plan: employee’s benefit is expressed as a hypothetical account balance instead of monthly benefit
Employee's "account" receives an annual contribution credit, usually a percentage of compensation, and an interest credit based on a guaranteed fixed rate or some recognized index
Account balance is the sum of all contributions and interest credits
Offers the option of purchasing an annuity benefit, but most employees will take the cash balance and roll it over into an IRA
Contributions determined by the sum of the contribution credits for all employees, plus the amortization of the difference between the guaranteed interest credits and the actual investment earnings (or losses)
Employees can see their "accounts" grow, but are still protected against market fluctuations
More portable, as employees can usually roll it into an IRA when they terminate employment or retire
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