Defined contribution plans may include both employee contributions (commonly known as 401(k) deferrals) and employer contributions.
Employer contributions are generally discretionary and based on a percentage of each participant’s compensation.
Employer contributions may also include a match of all or a portion of each employee’s 401(k) deferrals.
Contributions to the plan are allocated to each participant’s account and invested in stocks, bonds and other financial instruments.
Upon retirement or termination of employment, each participant is entitled to the vested portion of his or her account.
If you are interested in exploring the possibility of setting up a defined contribution plan, contact us today to talk to a qualified consultant who can help you find the right fit for your business.
Some of the more common types of defined contribution plans include: