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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Introducing DB(k)

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: What is a DB(k)?

A: This is the latest development in retirement plans that takes the best of Defined Benefit pension plans and 401(k) plans. This new retirement account allows employees and employers to contribute funds just like a 401(k) (often through some kind of matching arrangement) but then pays the benefits out in a guaranteed lifetime income stream just like a pension. The DB(k) addresses three common complaints about 401(k) plans: 1) that income at retirement is not known, and 2) benefits depend on investment results and are not guaranteed and 3) it is too easy to "cash in" the retirement account when changing jobs. DB(k)s also address the chief complaint about pensions, that they are too complicated and expensive. DB(k)s should be as easy and inexpensive. DB(k)s are owned by the individual, much like IRAs, and can be transferred from one employer to the next. These accounts will not be available until 2010 but firms have already started working on the integration of these accounts with current retirement plans.


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