Self-directed retirement plan
Also found in: Acronyms.
Self-Directed Retirement Plan
Self-directed retirement plan.
If you participate in an employer's retirement savings plan, such as a 401(k) or a 403(b), you usually must select the investments into which your contribution goes from a menu of choices your plan offers.
When that's the case, your plan is self-directed, and the income you receive when you retire is determined in part by the investment choices you make.
Individual retirement accounts are also self-directed, as you choose the way that the assets in the account are invested. Individual retirement annuities may or may not be self-directed, depending on the contract you chose.
In contrast, if you're part of a defined benefit pension plan, your employer is responsible for making the investment decisions. If you own a fixed annuity, the insurance company makes the investment decisions.