Save time with our cheat sheets, fact sheets, checklists & books!

February 19, 2009

Defined contribution plan

Your Guide

Print

Definition

What is a defined contribution plan?

An employer sponsored qualified-plan , where employees receive a promised contribution to their account . The contribution can be mandatory ( required each year) or discretionary, depending on the type of defined contribution plan. An example of  a defined contribution plan with a mandatory contribution feature is a money purchase pension plan. An example of a defined contribution plan with a discretionary contribution feature is a profit sharing plan.

Other examples of defined contribution plans include  target benefit plans, Employee stock ownership plans (ESOPs) ,stock bonus plans, 401(k) plans and thrift plans.

Referring Cite

IRC § 414(i), ERISA §3(34);

Additional Helpful Information

The employee’s benefit ( account balance ) in a defined contribution plan is the contributions made to the employee’s account, adjusted by earnings and losses.

Related Articles Tutorial or Other Content

More

Keep Learning

Domestic abuse distribution

A domestic abuse distribution is one that is made to domestic abuse victim, during the 1-year period beginning on any date on which the individual

Eligible retirement plan

The term “eligible retirement plan”, means a retirement plan to which a rollover contribution can be made. These are: (i)an individual retirement account described in

Qualified See-Through Trust beneficiary

Definition A qualified trust beneficiary is a trust that satisfies the requirements so as to be treated as a designated beneficiary.   For retirement accounts inherited

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Be among the first to know when

IRA Rules
Change