Money purchase plan

(redirected from Individual Account Plan)

Money purchase plan

A defined benefit contribution plan in which the participant contributes some part and the firm contributes at the same or a different rate. Also called an individual account plan.

Money Purchase Plan

An employer-contribution retirement plan in which the employer is required to place a certain amount in the retirement account each year. Usually this is a certain percentage of the employee's wages or salary. The employer is required to contribute the agreed-upon amount regardless of how the company performs in a given year. This reduces the risk for the account holder, but increases the risk for the employer. It is also called an individual account plan.

money purchase plan

A defined-contribution pension plan in which the employer contributes a specified amount of cash rather than shares of stock or a percentage of profits.

Money purchase plan.

A money purchase plan is a defined contribution retirement plan that requires the employer to contribute a fixed percentage of each employee's salary every year the plan is in effect.

The contributions must be made regardless of how well the company does in a given year. In contrast, in profit-sharing plans, the employer's contribution is more flexible because it is based on annual profits.

However, some small-company employers or self-employed people create a paired plan that combines money purchase with profit sharing. Paired plans require them to add at least a minimum percentage of each employee's salary to the plan each year.

References in periodicals archive ?
MassMutual Selected as New Retirement Plan Provider for The Western States Insulators & Allied Workers Individual Account Plan
While any individual account plan can offer a variety of choices regarding contributions, investments, and withdrawals, the choice of whether or not to participate is fundamental to a voluntary approach.
This applies to any defined benefit plan or individual account plan subject to minimum funding standards.
The Motion Picture Industry Pension Plan, the Motion Picture Industry Individual Account Plan, and the Motion Picture Industry Health Plan are three separate multi-employer, multi-union, Taft-Hartley, labor/management trust funds governed by ERISA.
Families with more assets have the ability to accumulate the most assets in an individual account plan due to other sources of assets and higher average incomes," writes Craig Copeland, EBRI senior research associate and author of the study in the May 2010 EBRI Notes, available online at www.
404(c) plan is an individual account plan (generally a profit-sharing, Sec.
The bad news: Using an acceptable method of determining substantially equal periodic payments, which are fixed in amount, may cause an individual's assets in an individual account plan or an IRA to be exhausted.
Generally, taxpayers pay a 10% penalty on withdrawals from an IRA or employer-sponsored individual account plan taken before reaching age 59 1/2, unless they take substantially equal periodic distributions over their life expectancy or a joint-life expectancy with the beneficiary.
The authors note that their conclusions are based on assumptions that may understate the reductions in benefits that would occur under an individual account plan such as the one generally put forward by Bush.
To qualify under ERISA Section 404(0, the plan must (1) be an individual account plan,(7) (2) provide an opportunity for a participant or beneficiary to exercise control over some or all of the assets in his individual account and (3) provide the participant or beneficiary with an opportunity to choose from a broad range of investment alternatives(8) the manner in which his account assets are invested.
the acquisition is for adequate consideration; - no commission is charged; and - the plan is an eligible individual account plan, or (for other plans) - the total FMV of such qualifying employer securities and real property held by the plan does not exceed 10% of the FMV of the plan's assets.
To be qualified as "an ERISA section 404(c) plan" under the regulations, the plan must be an individual account plan in which the participant both (1) has an opportunity to exercise control of the assets in his individual account and (2) chooses from a broad range of investments.

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