A Defined Contribution Plan is a qualified retirement plan providing periodic contributions specified by a written formula.
Contributions are made by the the employer. These plans, instead of supplying a specified future benefit, provide a contribution that the participants receive in an individual account where investment earnings accrue.
There are several types of plans:
- Money Purchase Pension Plans
- Target Benefit Plans
Profit Sharing Plans
- Simple 401(k)
- Cross-Tested (comparability)
- Employee Stock Ownership (ESOP)
- Stock Bonus
- Thrift Plan