Defined-Contribution Plan


DEFINITION of 'Defined-Contribution Plan'

A retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties.


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BREAKING DOWN 'Defined-Contribution Plan'

There is no way to know how much the plan will ultimately give the employee upon retiring. The amount contributed is fixed, but the benefit is not.

  1. Withdrawal Benefits

    The rights of an employee who has a qualified pension plan to ...
  2. Fully Funded

    A pension plan that has sufficient assets needed to provide for ...
  3. Advanced Funded Pension Plan

    A pension plan that is funded concurrently with the employee's ...
  4. Cash Balance Pension Plan

    A pension plan under which an employer credits a participant's ...
  5. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  6. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
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  1. Who can transfer funds to a Locked-in Retirement Account (LIRA)?

    To transfer funds, LIRA recipients must meet one of a variety of criteria. Only certain individuals are allowed to transfer ... Read Full Answer >>
  2. How do pay-as-you-go pension plans work?

    A pay-as-you-go pension plan is a specific type of pension scheme where the benefits are directly tied to the contributions ... Read Full Answer >>
  3. Who bears the investment risk in 401(k) plans?

    Who actually bears the investment risk in a pension plan depends on the type of pension plan that is employed. In a broad ... Read Full Answer >>
  4. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  5. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  6. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>

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