Which plan provides benefits based on a formula determined by the employee's salary history?

A defined benefit plan is designed to provide retirement benefits based on a specific formula that typically takes into account an employee’s salary history, years of service, and a predetermined accrual rate. This formula ensures that employees receive a predictable income during retirement, reflecting their earnings and service within the organization.

In a defined benefit plan, the employer bears the investment risk and is responsible for ensuring that sufficient funds are available to meet future benefit obligations. The benefits are often calculated at a percentage of the employee's highest earnings over a specified period, multiplied by the number of years worked at the company.

This stands in contrast to other types of plans, such as defined contribution plans, which focus on contributions made by the employee and sometimes the employer, and do not guarantee a specific payout upon retirement. Additionally, employee stock purchase plans and health savings accounts serve different purposes, such as enabling employees to purchase company stock at a discount or saving for medical expenses, respectively, and do not provide retirement benefits based on salary history.