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Defined-Contribution Pension Plan

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Defined Contribution Plan
A retirement plan in which the employee and/or employer contribute a set dollar amount each month. The benefits of a defined contribution plan are not set, and depend upon how well the contributions are invested before the pensioner starts to make withdrawals. The disadvantage of a defined contribution plan is the possibility that the investments will not perform as well as expected, giving the pensioner a less secure retirement. The advantage is that the pensioner, while still making contributions, has the ability to determine how the contributions are invested, at least to a certain extent. See also: 401(k).

defined-contribution pension plan
A pension plan in which an employer's periodic payments into the plan, rather than eventual retirement benefits to employees, are specified. For example, a defined-contribution pension plan may require an employer to contribute 5% of its employees' gross pay into a fund with contributions earmarked for each employee upon retirement.


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In its example, a firm sponsors four defined-contribution pension plans with assets totalling 1.
The Roth 401(k) is a feature that can be added to a new or existing company-sponsored defined-contribution pension plan, including traditional 401(k)s, safe-harbor 401(k)s, and 403(b) tax-sheltered annuities.
The private-sector panel members also called for a reform of defined-contribution pension plans modeled on U.
 
 
 
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