Defined-Contribution Plan

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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.

INVESTOPEDIA EXPLAINS '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.

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