401(a) Plan

What Does 401(a) Plan Mean?
A money purchase retirement savings plan that is set up and contributed to by an employer. The 401(a) plan allows for contributions by the employee, the employer, or both. Contribution amounts, whether dollar based or percentage based, eligibility and vesting schedule, are all determined by the sponsoring employer.

Funds are withdrawn from a 401(a) plan through lump-sum payment, rollovers to another qualified plan, or through an annuity.

Investopedia explains 401(a) Plan
Employers are able to create multiple 401(a) plans, each with different eligibility criteria, vesting schedules and contribution amounts. For this reason, the 401(a) plan is commonly used by employers to create inventive programs to help retain employees.

Related Terms

401(k) Plan
412(i) Plan
Active Participant Status
Employee Contribution Plan
Independent 401(k)
Plan Sponsor
Portable Benefits
Qualified Retirement Plan
Roth 401(k)
Vesting
More Related Terms

Related Links

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