An employer may have a liability to a defined benefit plan other than for its annual required contributions, depending on the future financial health of the plan.

Question

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An employer's liability to a defined benefit plan can go beyond just making annual required contributions. If the plan's financial health is not good, the employer may have to make additional contributions to fund the plan's obligations. This is known as a funding shortfall or withdrawal liability.

An Employer May Have a Liability to a Defined Benefit