Because defined benefit pensions represent large future liabilities, many companies have sought ways to restructure their retirement plans. In contrast to a defined benefit plan, a defined contribution plan (e.g., 401(k) plan) is typically funded through employee pre-tax salary deferrals and, sometimes, employer matching contributions. In such a plan, the retirement "benefit" will be a function of total contributions made on behalf of an employee during his or her working years and the results of the funding options chosen by the employee. Although the employer may decide to match employee contributions, there is no obligation to do so.

CRN200802-2013737