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 ESOP is a defined contribution plan that can have the features of a stock bonus plan and a money purchase plan, both of which are qualified under 1RC section 401(a).
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.
Typically, if a participant elects to receive a distribution in the form of an annuity, the money purchase plan will purchase and distribute an individual annuity contract to the participant.
An employee stock ownership plan, or ESOP, is a stock bonus plan, or a stock bonus plan combined with a money purchase plan, that is designed to invest primarily in the common stock of the employer (see pages 475 and 542).
The maximum annual addition that can be contributed to a money purchase plan is the lesser of 100% of the participant's compensation, or $49,000 (in 2010, as indexed).
This limit may be more or less favorable than the defined contribution limit applicable to a comparable money purchase plan.
Before 2000, the hospital group had a Money Purchase Plan that was funded solely by the hospital and did not provide employee investment direction.
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.
A money purchase plan is one in which the employer promises to contribute a certain percentage of each participant's annual compensation to the plan each year (see "MONEY PURCHASE PLANS," below).
401(k)), the profit-sharing plan, the money purchase plan and the employee stock ownership plan or ESOP.
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.