I have heard that a defined benefit plan is a “pooled” account. What does this mean?

Defined benefit plan (or cash balance plan) contributions are made to a “pooled” account. What this means is that the contributions are made lump sum to one account and individual accounts are not opened for each participant in the plan. Unlike a 401(k) or even an IRA, there are no participant sub-accounts whereby each employee can pull up an online account balance at any point in time. This pooled account is required because the plan itself looks at combined funding amounts for all employees.

However, just because the funds are not segregated into specific employee accounts does not mean that they are not tracked at the employee level. We at Emparion will track the individual account balances allocated to the employees and provide participant statements. This also includes vesting and forfeitures so all contributions can be properly allocated.