Which of the following statements is INCORRECT regarding defined benefit plans for $2023?$

Distributions from defined benefit plans are ordinary income to the taxpayer.

For employees who begin recelving retirement benefits in $2023,$ the maximum annual benefit is the lesser of $(1)100$ percent of the average of the

three highest years of compensation, limited to the annual compensation limitation for each of the three years or $(2)$ $$265,000.$

The formula for determining benefits is usually a function of years of service and recent compensation levels.

The level of benefits is a function of how well the funds were invested and the market growth over the employee's working years.