An employer contributes a stated amount of money each year to a retirement account (such as a 401(k)) for its employees. Employees are usually responsible for choosing investments in these accounts. Income taxes are deferred for contributions or earnings until the proceeds are withdrawn after age 59 1/2.
A retirement plan sponsored by your employer in which the benefits you receive at retirement are based solely on the contributions made by you and your employer and the earnings thereon. A 401K is a defined-contribution plan.
A qualified retirement plan that specifies the annual contributions to the plan, commonly expressed as a percentage of the employee's compensation. The contributions may be made by the employer, the employee or both, depending on how the plan is designed.
a plan that provides an individual account for each participant
An employee's benefits at retirement are determined by the amount contributed by the employer and/or the employee during his or her employment tenure, and by the actual investment earnings on those contributions over the life of the fund. Examples include 401(k), thrift plans and profit sharing plans. [Go to source
A pension plan under which the amount of the employee's retirement benefit is determined by contributions, not a pre-determined formula. The amount of the employee's benefit equals the accumulated contributions plus earnings the fund will produce in terms of a retirement income or lump-sum payment.
Pension plan in which the employer makes an annual payment to an employee's pension account.
A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Sometimes referred to as a "Money Purchase Plan". Related: Defined Benefit Plan.
A type of retirement plan where the ultimate benefits that are paid out depend on the level of contributions made to the plan and the investment performance of those contributions. Typical Defined-Contribution plans are 401-K plans and Profit-sharing Plans.