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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).
For more information, see Practice Note, Requirements for Qualified Retirement Plans.