Final answer:
The maximum benefit that a defined benefit plan can pay in 2020 is $230,000.
Step-by-step explanation:
A defined benefit plan is a type of retirement plan in which an employer promises a specified monthly benefit to employees upon retirement. The maximum benefit that a defined benefit plan can pay in 2020 depends on various factors, including the employee's years of service and salary history. However, there are limits set by the Internal Revenue Service (IRS) to ensure that highly compensated employees do not receive disproportionate benefits.
In 2020, the maximum annual benefit that a defined benefit plan can pay is determined by a formula based on the employee's average salary and years of service. The IRS sets a limit on the annual benefit payable, which is $230,000 for 2020.
It's important to note that the actual benefit that an individual receives from a defined benefit plan can vary and may be lower than the maximum allowed by the IRS, depending on the specific terms of the plan and the individual's circumstances.