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Your Defined Benefit Plan vs a Defined Contribution Plan

By David Cannella, Media Relations

This is the first in an occasional series on Defined Benefit Plans and your ASRS benefits.

The Arizona State Retirement System administers a Defined Benefit Plan for its members under section 401(a) of the Internal Revenue Service code. As a member of the ASRS, you can take comfort in knowing that upon retirement, you will never outlive your benefit. Month after month, year after year, your benefit will be there for you. That’s the security of a Defined Benefit Plan.

Unlike a Defined Contribution Plan, such as a 401(k), you won’t outlive your ASRS benefit. That’s because your benefit is calculated at the time you retire based on two primary factors: how long you worked, and your average annual salary when you retired.

The monthly amount of your benefit can never decrease, and never run out, no matter the economic conditions, no matter how long you live.

Here are some other general facts pertaining to your ASRS Defined Benefit plan vs. a Defined Contribution plan:

To learn more about your ASRS benefit, including projections of your benefit upon retirement, visit the ASRS website and Log In to your secure ASRS web page. We especially encourage new members to view the New and Prospective Members page for additional information on your ASRS benefits.

Next topic: How the ASRS pays for your benefit.

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This article appeared in "Expanding Your Financial Horizons" (Q4-2017), a digital publication of the ASRS.

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