A defined contribution plan is employer sponsored retirement plan under ERISA (The Employee Retirement Income Security Act of 1974.) Employees can contribute up to the maximum limit set by ERISA each calendar year with rep taxed dollars and their accounts accumulated tax deferred. A 401(k) is an example of a defined contribution plan.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
what is a defined contribution plan? Anything where the employer states upfront a percentage or dollar amount they are putting into a retirement account for an employee. There is no mention of retirement outcome beyond the employee is responsible for investment choices and return. If a plan states exactly what an employee will receive in retirement that is a defined benefit plan.
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A defined contribution plan is employer sponsored retirement plan under ERISA (The Employee Retirement Income Security Act of 1974.) Employees can contribute up to the maximum limit set by ERISA each calendar year with rep taxed dollars and their accounts accumulated tax deferred. A 401(k) is an example of a defined contribution plan.