What is the definition of Defined Contribution Plan?

A Defined Contribution Plan is a type of employer-sponsored plan that outlines the benefits and responsibilities of the employer and employee. It is a plan where both the employer and the employee make contributions. Usually, the employer makes payments equal the contributions of the employee, depending on a stated limit. This is essentially a pension or retirement plan.

Withdrawals are highly discouraged, so that to withdraw would mean having to put up with a considerable penalty.

The employer is in charge of collecting and investing the funds of the defined contribution plan. Companies may have a plan administrator. This can be done by having a full department to administer the plan or by outsourcing the administration to a company that are experienced in making investments.

• Difference in Conditions
• Assigned Risk Plans
• Assets
• Asset-Backed Securities
• Assignment