DB(k) Plans: A Hybrid Retirement Solution for Employers & Employees

The DB(k) plan is a type of retirement plan that is available for employers. This type of retirement plan combines features from the 401(k) plan with features from a defined benefit pension plan. It seeks to combine some of the best features of each type of retirement savings in order to benefit the employee.

With the DB(k) plan, the company puts aside a contribution of 1 percent of annual wages towards a pension plan. In addition to this, the plan has an automatic enrollment feature that will take 4 percent of an individual's pay to go into an account like a 401(k). The employee can choose to opt out of the contributions if she wants.

In addition to this, the employer will make a matching contribution of up to 2 percent of the employee's salary. The employee can then use the money that was contributed for the 401(k) portion of the plan to invest in various securities like mutual funds and stocks. The money is allowed to grow tax-free just as if it were in a traditional 401(k) plan.

This type of retirement plan is much more desirable for employers than having a 401(k) and a separate pension plan.