Money-Purchase Pension Plan

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Money-Purchase Pension Plan

A defined contribution pension in which an employer must contribute an amount equal to a certain percentage of the employee's compensation, usually 25%. While the amount of employer contribution is fixed, the amount of benefit is not. There are also penalties associated with receiving payments from the pension before retirement. These contributions are tax-deductible for the employer and guarantee the employee a certain amount of principal in the pension plan.
References in periodicals archive ?
Qualified retirement plans such as defined benefit pension plans, money-purchase pension plans, and 401(k) plans, can be installed in a corporation, a partnership or a sole proprietorship.
Two situations address money-purchase pension plans (MPPPs).
Under the current law, the maximum an employer can contribute to all qualified profit-sharing and money-purchase pension plans for a single employee is $35,000.