This is another type of defined benefit plan that provides lifetime income to the participants of the plan. Some have called these hybrid plans but they are not considered hybrid plans under the IRS regulations. In some cases, if the hurdle rate is set low enough, the plans are subject to some of the hybrid plan regulations – but this is not always the case. While these plans have been around for a long time, they have not been widely adopted until recently. The increased attention to these plans has been driven by their ability to mitigate risks and share risks between the contributing employer and the covered participants.
In this type of plan, the accrued benefit will increase or decrease based on the investment performance of the plan. This paper will discuss the mechanics of how this plan works as well as the pros and cons of the plan design. We will also discuss a variety of plan options that can be
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