Investor Glossary-defined contribution planInvestor Glossary-defined contribution planInvestor Glossary-defined contribution planInvestor Glossary-defined contribution planInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Defined Contribution Plan

The HTML to link to this page
 

A defined contribution plan is a type of qualified retirement plan, meaning it receives favorable tax treatment. A defined contribution plan requires the employer, on behalf of the employee, to make a specified, fixed contribution into the plan. The total dollar contribution made to the defined contribution plan is based on a percentage of the employee's compensation. The money is invested by the employee according to the options offered by the defined contribution plan. Unlike a conventional defined benefit plan, the benefits of a defined contribution plan are not fixed or predetermined. At retirement, the employee's benefit depends on the performance of the investment account and the amounts contributed to the defined contribution plan. A 401(k) plan is one type of defined contribution plan. One advantage of a defined contribution plan is that, for employees who change jobs, it is often possible to take the accumulated retirement assets with them.



Rate this defined contribution plan definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: Key Rate Duration, EBITDA, phantom income, debt service coverage, inflation, liquidity ratio, wholly-owned subsidiary, limit order, Zero Cost Collar, FTSE, LIBOR, required rate of return, covered put, 401a, class C shares, diluted share, annual return, APR, stock market close, VIX, current ratio, labor relations, 144a, ex-dividend date, 1035 exchange, cancelled check, per diem, implied volatility, real GDP, minority interest, margin rate, command economy, ex-dividend, quality assurance, irrevocable trust, risk management, in escrow, reverse mortgage, retained earnings, deferred tax, dividends payable, average price per share, option premium, balance sheet, open position, 1031 exchange, stock split, FICO score, deferred revenue


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use