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What's a defined benefit plan?

A defined benefit plan is a retirement account for which your employer does all the work, including ponying up the money and deciding where to invest it. It promises you a set payout when you retire, based on your salary and how long you worked there.

There are two basic kinds of defined benefit plans: pensions and cash-balance plans. These plans are a sweet deal. In general, you just show up for work and, assuming you meet basic eligibility rules, you're automatically enrolled in the plan. (In some instances, however, you aren't enrolled until you've completed your first year on the job.) You also need to stick around on the job for several years - typically five - to be fully "vested" in the plan. If you leave before then, you will forfeit any unvested pension benefits.

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