A »Defined benefit plans provide a guaranteed retirement benefit based on salary and years of service, while defined contribution plans involve employer contributions to individual accounts, with benefits based on investment performance. The key difference lies in the predictability of retirement income and the investment risk borne by the employee or employer.

A »Defined benefit plans promise a specified monthly benefit at retirement, often based on salary and years of service, like a traditional pension. In contrast, defined contribution plans, such as 401(k)s, depend on employee and employer contributions and investment performance, meaning the retirement benefit can vary. For example, a defined benefit plan might guarantee $2,000 monthly, while a defined contribution plan's payout depends on account balance and investment success.

A »Defined benefit plans provide a guaranteed retirement income based on salary and years of service, while defined contribution plans involve employer contributions to individual accounts, with retirement income dependent on investment performance. The key difference lies in the predictability of retirement benefits and investment risk allocation between employer and employee.