Using a defined-contribution plan, such as 401(k), is one way to achieve smooth benefit accrual.
Currently, 55% of plan sponsors enroll workers automatically in their employer-provided defined-contribution plan, up from 24% in 2006.
For pilots, it sponsors a defined-benefit pension plan, a defined-contribution plan and gives access to a 401(k) that doesn't include any company match.
State and local governments that are currently outside of Social Security are giving serious consideration to shifting to a defined-contribution plan, as Utah has recently done.
FORBES: How Three Texas Counties Created Personal Social Security Accounts and Prospered
Union leaders said that they liked the look of the raise, but that what they really needed was a defined-benefit pension plan, not the defined-contribution plan that management had offered them.
The 401(k) plan accelerated in 1986, when Congress passed legislation permitting the replacement of the defined-benefit plan offered to government workers with a less attractive defined-benefit plan and an attractive defined-contribution plan.
If your earnings are more modest, you may be able to use an off-the-shelf "defined contribution" plan from a mutual fund company, broker, bank or insurance company.
Most proposals for creating a defined-contribution alternative to a state pension plan or Social Security use an IRA or 401(k) model.
FORBES: How Three Texas Counties Created Personal Social Security Accounts and Prospered
Some seminars are designed to educate employees on plan switches--usually to a defined contribution from a defined benefit setup.
For starters, the majority of defined-contribution plans haven't added the Roth 401(k) in-plan conversion option since it was created by a federal law nearly two years ago.
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