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Defined Contribution Plan
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Defined Contribution Plan
Practical Law Glossary Item 2-502-2755
(Approx. 2 pages)
Glossary
Defined Contribution Plan
A
qualified plan
that provides an individual account for each participant. A participant's benefit is determined by the value of his account based on:
The amount of contributions allocated to the account plus any income.
Expenses.
Any investment gain or loss credited to or charged against the account.
In a defined contribution plan, the participant bears the investment risk. Defined contribution plans can take many different forms and include:
Profit sharing plans (with or without a 401(k) feature).
Money purchase plans
.
Employee stock ownership plans
.
For more information, see
Practice Note, Requirements for Qualified Retirement Plans
.