Which statement accurately describes a Defined Benefit Plan?

A Defined Benefit Plan is designed to provide a specific amount of retirement income to participants, typically calculated based on a combination of factors such as salary history and years of service. This guarantee of a predetermined retirement benefit is a defining feature of such plans, ensuring that retirees receive a stable income regardless of investment performance or other variables. This differs significantly from other types of retirement plans that may emphasize employee contributions or individual account balances.

In contrast, options related to flexible employer contributions, employee funding, or individual accounts do not accurately capture the essence of a Defined Benefit Plan. Such plans are employer-funded and usually do not rely heavily on employee contributions to secure the promised benefit, nor do they provide individual accounts for employees, which is characteristic of Defined Contribution Plans. Thus, the focus on guaranteed income makes the first statement the most accurate descriptor of a Defined Benefit Plan.