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Qualified Retirement Plans

2 Basic Types of Plans
Defined Benefit Plan
A defined benefit plan promises the participant a specific monthly benefit at retirement and may state this as an exact dollar amount. Monthly benefits could also be calculated through a formula that considers a participant's salary and service.

Defined Contribution Plan
Plan provides and individual account for each participant. The benefits are also affected by income, expenses, gains and losses. The annual contributions in a defined contribution plan cannot exceed the smaller of $40,000 or 100% of the participant's compensation. Some examples of defined contribution plans are:

 


Last Updated: 9/23/2012 10:05:00 PM