Defined Contribution Plan

An employer-sponsored qualified plan, where employees receive a promised contribution to their account. The contribution can be mandatory ( required each year) or discretionary, depending on the type of defined contribution plan. An example of a defined contribution plan with a mandatory contribution feature is a money purchase pension plan. An example of a defined contribution plan with a discretionary contribution feature is a profit-sharing plan.

 

Other examples of defined contribution plans include target benefit plans, Employee stock ownership plans (ESOPs), stock bonus plans, 401(k) plans and thrift plans.

 

(Source: Retirement Dictionary)