Final answer:
True, defined benefit plans are required to adhere to ERISA standards. These plans are declining in favor of defined contribution plans like 401(k)s, which provide tax benefits and portability.
Step-by-step explanation:
True, a defined benefit plan must meet the requirements set forth by the Employee Retirement Income Security Act (ERISA). ERISA sets minimum standards for pension plans in private industry and requires plans to provide participants with plan information, including important facts about plan features and funding. It also sets minimum standards for participation, vesting, benefit accrual, and funding. Moreover, pension insurance is provided by the Pension Benefit Guaranty Corporation, which steps in to pay some benefits if a company cannot fulfill its pension obligations due to bankruptcy.
While defined benefit plans provide a specified monthly benefit at retirement, often based on a combination of salary and years of service, they are becoming increasingly rare. They are being replaced by defined contribution plans, such as 401(k)s and 403(b)s, where the employer contributes a fixed amount to the worker's retirement account. These plans are advantageous as they are tax-deferred, portable, and may better protect retirees from inflation due to investment gains.