Since a Defined Benefit plan provides a predetermined, stated benefit, this amount must be made available when each participant reaches a set retirement age regardless of how the plan's investments perform. Seven-year graded vesting schedule. To have a right to all or a portion of the employer's contribution, an employee must complete a selected number of years of service as set by the vesting schedule. There is no maximum amount to be contributed to the plan. An actuary determines the amount needed so that each eligible employee receives a stated benefit at retirement.
Employers can choose to offer a matching contribution.
They can also choose to offer employees the opportunity to withdraw or borrow from the plan before retiring under certain circumstances. Salary deductions allow the employees to tailor their plan to their own personal needs and objectives. Typically, employees can self-direct their own investments. Employees may contribute to the plan, and employers may offer their employees matching contributions to encourage participation in the plan. In addition, employers may make discretionary contributions to employees' accounts.