Defined-contribution Pension Plan
What is it? An employer-sponsored, tax-deferred retirement plan such as a 401(k) or 403(b). Employees elect to contribute a certain percentage of their income up to a maximum amount. Employers often match a portion of employee contributions. What you get at retirement depends on the amount you contribute, the length of time your investment grows tax-deferred, and the performance of the investments you choose.You must contribute to get any benefit at retirement. It can take up to seven years to vest in your employer?s matching funds, but you are always vested in your own contributions. When you leave the company, you can roll over the money into an IRA or your new company?s plan. While a defined-contribution plan can be riskier than a traditional pension, it also has a higher potential payoff.Added By: Alexander
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