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