Retirement plan that defines precisely the amounts employer and employee contribute to the plan but does not specify the retirement income.
A tax-qualified retirement plan in which annual contributions are determined by a contribution formula set forth in the plan. The benefits paid to a participant vary with the amount of contributions made on his or her behalf and with the length of service under the plan.
A type of retirement plan where the plan specifies the amount of the contribution that will be made by the employer. The amount of the retirement accumulation is determined based on the plans investment performance. Examples of defined contribution plans include the following: 401(k) Plans, and Simplified Employee Pension (SEP) Plans.
An employer-sponsored retirement plan in which the level of contributions is fixed through annual or periodic contributions to accounts set up for each employee. The employer contribution may be a percentage of the employee's salary, or may be related to years of service. Employee contributions are also permitted. The benefit at retirement depends on the return from investments. Common examples of defined contribution plans include 401(k), 403(b), and 457 plans, profit-sharing plans, and employee stock ownership plans (ESOPs).
A pension plan through which the employer's contributions are fixed and are made into individual accounts. As such, the retirement amount varies by individual. For example, the plan may require an employer contribution of 5 percent of gross salary. The actual retirement benefit, however, is unknown.
company retirement plan, such as a 401(k), in which the employee elects to defer some amount of his or her salary into the plan. The employee makes investment selections and bears the investment risk.
A Defined Contribution Plan is a retirement plan whose benefits depend on the accumulated value of an employee's accounts. There is no set formula for determining the employee's future benefits for planning purposes. Depending on the specific plan type, the employer makes annual contributions into the plan which may be mandatory or discretionary. Some plans may allow employees to make their own contributions into the plan as well. Earnings can grow Tax Deferred until the employee begins withdrawals, generally at retirement.
A qualified retire- ment plan in which the level of contributions is based on a percentage of the employee's compensation. The money is invested by the employee according to the options available. The benefit at retirement depends on the performance of the investment account.
A retirement plan where the employer pays a predetermined percentage of salary to a retirement fund. The amount of the retirement benefit is determined by the amount of the contributions and the returns on the invested contributions. The employee bears the economic risk.
A pension plan where a preset amount is contributed by the employer. The amount of the benefit payment is dependent upon the amount that is in the employee's fund at retirement.
A plan in which the employer and/ or the employee put money into the fund but the benefits are not specified. The employee is entitled to the amount of money put into the fund in his or her name, plus whatever interest has accumulated. These plans have become increasingly common in recent years; examples include profit sharing and 401( k) plans.
Type of retirement plan that provides an individual account for each participant. The account receives a contribution based on a percentage of compensation, an allocation of earnings and expenses, and where applicable, an allocation of forfeitures. Contributions may be made by employers and employees.
A retirement plan which provides for a specific dollar amount or percentage of income to be contributed to the plan. The actual benefit received by employees is not guaranteed, but depends on the contributions and their returns.
A plan that provides an individual account for each participant and in which benefits are based solely upon the amount contributed to the account (plus or minus any income expenses, gain and losses allocated to the account).
A retirement plan in which the employer's obligati... Add a comment
a company retirement plan in which the employee elects to contribute some portion of his or her salary into a retirement plan, such as a 401(k) or 403(b). With this type of plan, the employee bears the investment risk. The benefits depend solely on the amount of money made from investing the employee's contributions. Defined contribution plan capital cannot be invested in private equity funds.
A retirement plan (unlike KPERS) that bases retirement income entirely on the performance of investment choices selected by the member.
A retirement plan with varying contribution and benefit schedules depending on the return on the investments.
a qualified retirement plan which provides for the employer and/or employee to make annual contributions to the plan; the amount of each employee's retirement benefit ultimately depends on the investment performance of that particular employee's account rather than the employer's promise to pay a stated benefit as in a defined benefit plan
An employer-sponsored retirement plan to which the employee, and sometimes the employer, contributes. No payout, or benefit, is promised.
An employee benefit plan under which each employee has a separate account, and certain specific “defined” amounts are paid to each account. Example: A profit-sharing plan.
A pension plan that specifies the amount of contributions that both employer and employee must make; it makes no promises concerning the size of benefits at retirement.
a bucket of money with the employee's name on it
a little like a savings account
an employer-sponsored retirement that defines the level of contributions that may be made for plan participants, and can be funded by both the employer and the participants
a pension plan under which the group pays fixed contributions into a separate entity
a pension plan which has an account specified for the individual employee
a perquisite of seniority and, thus, upon the service member's reemployment, requires the college, university, or public employer to make up employer contributions that were not made to the plan while the member was in the uniformed services
a plan in which you have an individual account
a qualified retirement plan in which the contribution is defined, but the ultimate benefit to be paid is not
a retirement plan based upon the contents located in the individual account
a retirement plan in which contributions are based on a set formula (e
a retirement plan that provides for an individual account for each plan participant, and for benefits based solely on the amounts contributed to such an account and any income, expenses, gains and losses
a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee
a retirement plan where the employee contributes a set amount of money on a regular basis
a retirement savings vehicle that provides benefits "defined" by the contributions to the plan and the investment earnings on those contributions
a type of retirement plan in which the amount of the employer's annual contribution is specified
a viable alternative to the traditional defined benefit retirement plan
A retirement plan that determines your retirement benefit based on the amount of money you put into it (e.g., 401K plan). Dental care Disability insurance
A Defined Contribution plan is one that provides for contributions directly to individual accounts established and maintained for each plan participant. The contributions may consist of either employee or employer contributions, or both. The participant is generally entitled to receive the account balance (together with any interest accrued thereon, as well as investment gains and/or losses) when the employee retires or otherwise terminates employment with the company. There are several types of defined contribution plans, including profit sharing plans, thrift plans, 401(k) plans, retirement savings plans, stock bonus plans, and employee stock ownership plans (ESOPs).
In these plans, you or your employer (or both) contribute to your individual account under the plan. These contributions generally are invested on your behalf. What you receive is based on contributions plus or minus investment gains or losses. Examples include 401 (k) plans and 403 (b) plans.
A pension plan that specifies the contributions made by employees and, in many cases, the employer on behalf of each plan participant. These funds accumulate for each plan participant until retirement. At retirement, funds are distributed either as a lump sum or monthly annuity. Benefits are based on the amount of contributions plus earnings.
A plan in which the company defines the contribution it will make to the employee's account in the plan rather than a fixed benefit the employee will receive. Typically involves both company and employee contributions; employee bears the investment risk.
In accordance with the Internal Revenue Code and ERISA, a Plan that provides for an individual account for each Participant and for benefits based solely on (1) the amount contributed to the Participant's account plus (2) any income, expenses, and gains and losses allocated to the Participant's account.
A defined contribution plan is an employer sponsored retirement plan. The income the plan provides is not predetermined or guaranteed, as it is with a defined benefit pension. Rather, it varies according to how much is contributed to the plan, how the contributions are invested, and what the return on that investment is. 401(k), 403(b), 457, and profit-sharing plans are examples of defined contribution plans.
A pension plan that requires a fixed amount of money to be invested on the employee's behalf during the employee's working year.
A retirement plan in which your employer's and your own member pretax contributions are credited to your individual account and invested in one or more investment options. Future benefits are based on your account balance. The ELCA Retirement Plan is a defined contribution plan.
A plan that provides an individual account for each participant, with benefits based solely on the value of that account.
An employer-sponsored retirement plan under which contributions are made by the employer, employee, or both, to individual member accounts to generate funds for distribution to the member at retirement ( termination). Contribution amounts are determined by the plan sponsor and are usually a set percentage of the employee’s salary. Investments are generally directed by the employee, among investment products offered by the plan. The benefit amount at retirement ( termination) is the sum that accumulates in the member’s account, based on contributions made and investment earnings/losses. It is the member’s responsibility to ensure that sufficient moneys are raised to provide for adequate retirement income.
In the defined contribution plan, the amount of the contributions paid into the pension fund is fixed in advance. The amount of the retirement benefit depends on the total amounts accumulated in an account on behalf of the employee. The amount corresponds to the total of the following amounts: - the employee's contributions; - the employer's contributions; - the interest and the return credited on the contributions.
A company retirement plan, such as profit sharing, money purchase pension, 401(k) or 403(b), in which each participant has an individual account within the plan with benefits based solely upon amounts contributed and the past performance of that account. The participant bears the investment risk.
This type of plan tells you how much your company will save for you in your pension plan. Also known as a money purchase plan, your employer makes specific annual contributions to an account based on how much money you make. In some plans, you may contribute as well.
A pension plan in which the employer's contribution is fixed, but the payout may vary depending on market conditions.
A Defined Contribution Plan is a Qualified Retirement Plan that is established by an employer on behalf of its employees for their retirement. An individual account is established for each participant. The amount that is available to the participant upon his retirement (or termination of employment as provided in the plan document) is based on the amount contributed to the participant's account and any income, expenses, gains, losses (including changes in market values), and forfeitures allocated to the account or balance. A Defined Contribution Plan is also called an Individual Account Plan.
a type of savings plan that allows participants to make pre-tax contributions that accumulates tax-free. Contributions, plus any earnings, are not subject to state or federal taxes until withdrawn, in most cases after retirement. The amount paid is determined by the amount of contributions made and the rate of return on the investments chosen.
A plan to which your employer contributes a certain amount each year; The amount your employer contributes may vary from one year to the next. Your benefit from this type of plan is based on the amount of money that has accumulated in your account when you retire.
An employer-sponsored retirement plan under which contributions are made by the employer, employee, or both, to individual member accounts to generate funds for distribution to the member at retirement (termination). Contribution amounts are determined by the plan sponsor and are usually a specified percentage of the employee's salary. The benefit amount at retirement (termination) is the sum that accumulates in the member's account, based on contributions made, plus investment earnings. Members may have to meet certain age and/or service requirements to receive account accumulations. It is the responsibility of the member (employee) to ensure, through investment of account funds in employer-offered investment products, that sufficient moneys are raised to provide adequate income in retirement for himself and/or his beneficiaries.
A retirement option offered by STRS Ohio where retirement income is based solely on the performance of investment choices you select. You may allocate your contributions among various investment options managed by STRS Ohio. This retirement plan can be chosen by new members (who start employment on or after July 1, 2001) and members with less than 5.0 years of service credit as of June 30, 2001. Members in this plan do not have access to health care coverage, cost-of-living adjustments and death and supplemental benefits in retirement through STRS Ohio, nor, survivor or disability benefits while teaching. For detailed plan information, click here.
A company retirement plan in which the employer is responsible only for making fixed contributions to the employee’s over a period of time. The employees of the company make the main contributions to the plan.
separate account in the employee-spouse's name. Often the employee will contribute pre-tax dollars to his separate account, which will then be matched, up to a certain amount, by the employer's contribution. This type of plan has a short vesting period and the employee never looses the value of his contributions. A common example of a defined contribution plan is the 401(k), 403(b), or 457.
A type of retirement plan in which the benefits are not defined in advance. Only the contributions made by the employee and employer are defined.
A DC plan is the formal name of the 401k plan. It's a savings account where the amount contributed per annum is defined by the participant (employee) via an election form, and the amount of the ultimate benefit is determined by the market performance of the investment options selected by the employee. Employers may also contribute in the form of a match, implemented as an incentive for employees to join the non-mandatory retirement savings plan.
The right of the participant to either cash or services after meeting eligibility requirements, usually monthly payments payable on retirement or disability.
Refers to a retirement plan that has a quantified amount to be invested each year. Depending on the plan, there may be maximum and minimum contributory dollar amounts. Also, there may be years-of-employment and income constraints. Some popular plans are the 401K and IRA plans. Here, there are no guarantees as to eventual value of plan amount or plan benefits. Poor, moderate, or better than average investment performance directly impacts the value of the account and potential benefits. Compare to Defined Benefit Plan.
In general, a retirement plan which provides benefits based on amounts contributed plus/minus investment returns (e.g., the Tax-Deferred 403(b) Plan). A DC plan is governed by section 401 (a) of the Internal Revenue Code. All employees are required to con-tribute to this plan on a pre-tax basis. Voluntary contributions may be made on an after-tax basis.
A retirement plan that whose benefits are dependent upon the investment performance and the total contributions made by the employer and employee. Contributed funds grow tax-deferred, and a discretionary match by the employer is sometimes offered. Employees are given investment options, and they bear the risk of how those selections perform. Popular defined contribution plans include 401(k), 403(b), and 457.
This kind of plan refers to one for which the employer makes regular contributions of a specified amount of money. In contrast to a defined benefit plan, it does not promise the employees any specific amount of retirement benefits. The employee's retirement benefit will depend on how much was contributed to his or her account and how the plan's investments performed over the years. Examples of this kind of plan include a profit-sharing plan, a money-purchase plan, a target-benefit plan, stock bonus plans, and employee stock ownership plans.
Also called an individual account plan. A type of retirement plan in which the employer pays a specified amount of money each year, which is then divided among the individual accounts of each participating employee. Profit-sharing, employee stock ownership and 401(k) plans are all defined contribution plans.
A broad term used to encompass a type of benefit plan where the employer gives employees a set amount of cash to either purchase health insurance from predetermined vendors or from a company of their choosing. Defined contribution plan is often used interchangeably -- and erroneously -- with "consumer-directed health plan" or "health reimbursement arrangements." There are distinct differences among the types of plans offered from employer to employer.
the amount of the contribution is defined by the plan rather than the benefit. A participant knows how much goes into the plan, not the benefits that may eventually be paid out. A defined contribution plan has individual accounts for each participant in the plan, another key difference from defined benefit plans. Also, both employer and/or employees may contribute to a DC plan.
Pension plan with specific contributions and a level of pension dependent upon the growth of the pension fund.
An employer-sponsored plan in which contributions are made to individual participant accounts, and the final benefit consists solely of assets (including investment returns) that have accumulated in these individual accounts. Depending on the type of defined contribution plan, contributions may be made either by the company, the participant, or both.
a plan that provides for an individual account for each participant and for benefits to be the sum of amounts contributed to the employee's account, plus any investment return or forfeitures allocated to that account.
A plan which provides for an individual account for each participant based solely on the amount contributed to the account- plus earnings and forfeitures.
Retirement plan in which the contribution is defined, but the ultimate benefit is not. Each participant has an individual account to which (s)he and the employer may contribute and within which the participant may choose between a limited number of investment options. The amount in that account at retirement depends on the total amount contributed and its investment performance throughout the years. Examples: 401(k) and 403(b) plans.
A retirement savings plan that provides for a separate account for each person covered by the plan. Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year.
A pension plan whose sponsor makes specified contributions into the plan on behalf of qualifying participants
Participant benefits based on individual account balances. Individual balances are determined by contributions and investment performance.
A company-sponsored pension plan, also known as a money purchase plan, that defines the contributions to be made by the employee and the employer. It does not, however, define the amount of pension income to be received at retirement. The accumulated value of the plan is used to purchase either a life annuity, or if the pension plan permits, a Life Income Fund (LIF).
A company retirement plan, such as a 401(k), in which the employee elects to defer a portion of his or her salary into the plan, directing the investments of those dollars and bearing the investment risk.
A retirement plan under which the annual contributions made by the employer or employee are generally stated as a fixed percentage of the employee's compensation or company profits. The amount of retirement benefits is not guaranteed; rather, it depends upon the investment performance of the employee's account.
Post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
A retirement plan that does not promise a specific benefit at retirement. Instead, benefits are based on plan contributions, earnings, expenses, and losses.
A retirement plan that is funded by contributions made by the employer and the employee. The ultimate value of the plan will be based on these contributions and on the return of the investments chosen by the plan participant. Profit sharing plans, 401(k)s, 403(b)s, and 457s are defined contribution plans.
A plan that maintains an individual account for each participant and specifies how contributions to the account are determined instead of specifying the amount of benefits the individual will receive. Individual account balances are based on employer and employee contributions, investment experience and allocated forfeitures.
A pension plan that specifies the contributions to be made by or for the credit of a member. The accumulated contributions and investment yield (on an individual account basis) determine the benefit for the member, at retirement.
A retirement plan with benefits determined by the amount in an employee's account at the time of retirement. The account may be funded by contributions from both the employer and the employee.
A qualified pension plan that specifies the amount of the employer's contribution under a formula for a fixed-dollar contribution or a percentage of compensation. Specific limits are set as to the maximum contribution that can be made each year.
A retirement plan in which the amount of contributions, but not of benefits, is preestablished, with the ultimate amount of benefits depending on both the amounts contributed and the rate of return realized on the plan's assets. To that extent, the risk of a defined contribution benefit plan is borne by the employee, not the employer: if investment returns are poor, or too little has been contributed, the employee's ultimate benefit will be low, and the employee will have no recourse to his or her employer who, in turn, will have no obligations to supplement those benefits. Includes 401(k) plans, profit sharing plans, 403(b)'s, Keoghs, and SEP's.
Defined by the Internal Revenue Code and ERISA as a plan that provides for an individual account for each participant and for benefits solely on (1) the amount contributed to the participant's account plus (2) any income, expenses, gains and losses, and forfeitures of accounts of other participants that may be allocated to the participant's account.
A tax-deferred retirement plan that provides a benefit based on the contributions of the participant and any gains, losses or income by the account. A 401(k) is an example of a defined contribution plan.
A type of qualified plan in which a participant's benefits are based solely on the participant's account balance; the account balance depends on the level of employer and employee contributions and the earnings on those contributions.
A retirement plan offering a benefit that depends on the total contributions made by the employer and the employee, and on the investment returns earned by those contributions. Employees generally bear the investment risk.
A defined contribution plan is a retirement plan that provides an individual account for each participant and benefits that are based solely on (1) the amount contributed to the participant's account, plus (2) any income, expenses, gains/losses, and forfeitures that may be allocated to the participant's account.
An employee benefit plan that provides a separate account for each person covered and pays benefits on amounts allocated to each account.
a retirement account, in which the client has the discretion on how much money to contribute to various investments, such as stocks and bonds. Example: 401(k)s.
A pension plan that defines the amount of employer and employee contributions to the pension fund, determined on an individual account basis. Also known as a money purchase pension plan. The benefit the member will receive on retirement is calculated at the date of retirement and is based on accumulated contributions and investment income.
401(k)s and other defined contribution plans do not pay a specified benefit upon retirement. Instead, the money available to help you fund your retirement is based on the amount of contributions you invested in the plan, length of time and the performance of your investments over time.
A retirement plan with benefits determined by the anticipated amount an employee's account will contain at retirement date. The account may be funded by both the employer and the employee contributions.
Retirement plan in which employers make periodic contributions to employees' accounts. Can be funded by employer or employee contributions or both. Benefit payable at retirement is based on money accumulated in each employee's account. The final amount reflects the total contributions plus investment gains or losses.
A retirement plan wherein a certain amount or percentage of money is set aside each year for the benefit of the employee. There is no way to know how much that will ultimately give the employee upon retiring. There are restrictions as to when and how you can withdraw these funds without penalties.
See EMPLOYEE BENEFIT PLAN.
A plan which the contribution rate is fixed and benefits to be received by employees after retirement depend upon the contributions and their earnings.
401(k), 403(b), 457, and profit-sharing plans are examples of defined contribution retirement plans offered by employers. The benefits that is, what you can expect to accumulate and ultimately withdraw from the plan are not predetermined, as they are with a conventional defined benefit pension, and vary according to how much is contributed to the plan, how it is invested, and what the return on that investment is. One advantage of defined contribution plans is that you often have some control over how your retirement dollars are invested. You choice may include stock or bond mutual funds, annuities, guaranteed investment contracts (GICs), company stock, cash equivalents, or a combination of these choices. An added benefit is that, if you switch jobs, you can often take your accumulated retirement assets with you. The downside is that there is no guarantee of the amount of retirement income you'll have available. The terms 401(k), 403(b), and 457 refer to the sections of the Internal Revenue Code where the plans are described.
An employee benefit plan under which the employer sets up benefit accounts and contributions are made to it by the employer and by the employee. The employer usually matches the employee's contribution up to a stated limit.
Employee-funded retirement plans, such as 401(k)s and 403(b)s, that pay benefits based on the amount the employee has accumulated over his or her working life.