Defined contribution plans

A defined contribution plan is probably the most common type of retirement plan these days. Examples of defined contribution plans include 401(k) plans, 403(b) plans, employee stock ownership plans, and profit-sharing plans. It is a type of employer-sponsored pension plan that does not promise a specific amount of benefits at retirement. In these plans, the employee or the employer (or both) contribute to the employee's individual account under the plan, sometimes at a set rate, such as 5 percent of earnings annually. These contributions generally are invested in various securities on the employee's behalf. The employee will ultimately receive the balance in their account, which is based on contributions plus or minus investment gains or losses. The value of the account will fluctuate due to the changes in the value of the investments.

401(k)s
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403(b)s
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Employee stock ownership plans
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Profit-sharing plans
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