Money purchase 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 ?
Gillespie Money Purchase Plan, William and Sarah Humphries, Catherine Jane Howe Trust, James and Jane Flack and William Daniel Thomas Jr,.
An individual seeking to draw from a flexible drawdown plan MUST NOT make contributions to a money purchase plan, including employer and third party payments, or be an active member of a defined benefits scheme in the same tax year.
It plans to close its' final salary pension scheme to new employees and open an inferior money purchase plan.
Short plan year fliers who must file a Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information, or Schedule MB, Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information, and/or a supplemental attachment to Schedule R for 2008 will receive an automatic extension to file their complete Form 5500 until 90 days after the 2008 forms are available.
Under the law Mary can contribute $25,000 to a SEP-IRA, $8,000 to a Simple IRA, $25,000 to a profit-sharing or money purchase plan and $37,000 to a 401(k)--$25,000 employer contribution plus $12,000 employee deferral.
British Airways pilots are protesting against plans to replace the airline's final salary pension scheme with a money purchase plan.
In a money purchase plan, you can invest up to 25% of your income or $30,000 (whichever is less)
The video walks employees through the differences between the defined benefit and defined contribution plans and introduces them to specific features of County's money purchase plan.
Abraham Money Purchase Plan, dated December 31, 1999, f/b/o Jeffrey S.
How-w ever, many firms use the switch to a money purchase plan as a convenient opportunity to cut the level of the employer pension contribution, in some cases from as much as 20 per cent of salary per annum, down to 3-5 per cent.
30 stand-alone final salary schemes, five multi-employer final salary schemes, a money purchase plan, a career average revalued earnings (CARE) scheme and a flexible retirement plan.
Their Delta final salary scheme has been frozen and they have been transferred into the new company's money purchase plan.