Defined Benefit Plans back to top The traditional form of fixed retirement income is called the Defined Benefit Plan, which is paid either as a lump sum or as monthly payments when the employee retires. These plans still do exist, though generally the portable 401k has supplanted them in most benefits packages. Income amounts are generated based on the length of time that an individual was with the company and that individual's salary. Defined benefit plans are funded and controlled entirely by your employer. Matched funds become available to an individual employee according to a company's vesting schedule.
Money is contributed through automatic payroll deduction.
Your investment will continue to grow, earning interest and capital gains on a tax-deferred basis. Employer contributions are often dependent on how well the company does in a particular year. Consequently, in a bad year may or may not contribute anything to an employee's plan. Stock Option Plans back to top Stock option plans have come into the spotlight in the last few years, owing to the incendiary market performance of many technology and new media start-up companies. Stock is offered to employees at a reduced price, and that price is fixed until such time as the employee decides to purchase shares.