Defined-contribution plan

A defined-contribution plan is a retirement plan controlled by an employee, who decides how much to contribute and how to invest the funds.

Expanded Definition

Defined-contribution plans are becoming the standard, replacing pensions that guaranteed retirees payments throughout retirement from their former employers.

Types of defined-contribution plans include: 401(k), 403(b), 457, Simplified Employee Pension (SEP), and Savings Incentive Match Plan for Employees (SIMPLE).

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Related Terms

• Defined-benefit plan
• 401(k)
• 403(b)
• 457
• Simplified Employee Pension (SEP)
• Savings Incentive Match Plan for Employees IRA (SIMPLE)

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