Other Defined Contribution Plans
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Money Purchase Pension Plan
  • Defined contribution
  • Individual participant accounts
  • Employer typically contributes a set percentage of salary
  • Employees may contribute (after-tax)
  • Pre-tax employee contributions possible for public sector employees
  • Retirement benefits determined by accumulated contributions and earnings
  • Contributions may be offset by social security taxes
  • Forfeitures used to reduce employer contributions
  • Favorable to short-term and younger employees
  • Nondiscrimination rules generally apply to private sector employers
  • Same benefit distribution rules as defined benefit plans
  • Assets held in tax-exempt trust and invested in stocks, bonds and short-term cash management
  • Employees bears investment risk
Profit Sharing Plan
  • Defined contribution
  • Individual participant accounts
  • Employer contributes discretionary amounts
  • Contributions may be off-set by social security taxes
  • Employees may contribute (after-tax)
  • Forfeitures usually shared among participants
  • Participant loans may be allowed
  • Favorable to short-term and younger employees
  • Non discrimination rules generally apply to private sector employers
  • Flexible withdrawal and distribution provisions permissible
  • Assets held in tax-exempt trust and invested in stocks, bonds and short-term cash management
  • Employees bear investment risk

Contact:

Lea Anne Porter, vice president, retirement plans, 512/465-1544