What type of distributions can be expected from defined benefit hybrid plans?

Defined benefit hybrid plans are designed to combine features of both traditional defined benefit plans and defined contribution plans. This dual structure allows for flexible distribution options. Typically, participants in hybrid plans may receive their benefits in the form of either annuity payments or lump sum distributions upon retirement, reflecting the plan's characteristics.

The inclusion of both distribution methods means that participants can choose how they would like to receive their accrued benefits. Lump sum distributions provide a one-time payout, which can be appealing for those who prefer immediate access to their funds or wish to manage the investments themselves. On the other hand, annuity distributions ensure a guaranteed income stream for the retiree over a certain period, which can provide stability and peace of mind.

Thus, hybrid plans are structured to accommodate the diverse preferences of participants regarding how they want to manage their retirement savings, making the availability of both annuity and lump sum distributions a key feature of these plans.