What is limited defined?

A limited defined benefit plan is a type of retirement plan that provides employees with a fixed amount of retirement benefits. The benefit amount is typically based on a formula that takes into account factors such as the employee's salary at retirement and length of service with the company. Unlike a defined contribution plan, such as a 401(k), the employer is responsible for funding the plan and assumes the investment risk.

Limited defined benefit plans are typically offered by smaller employers and are less common than traditional defined benefit plans. They are also subject to more strict funding and reporting requirements under federal law. Because the benefits for these plans are fixed, they may not keep pace with inflation and may not provide employees with the same level of retirement security as other types of plans.