Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Actuarial assumptions and computations are required to figure these contributions.
In general, the annual benefit for a participant under a defined benefit plan cannot exceed the lesser of:
- 100% of the participant's average compensation for his or her highest 3 consecutive calendar years, or
- $230,000 for 2020 ($225,000 for 2019)
The dollar amounts are subject to cost-of-living adjustments in future years.