April 20, 2007, Newsletter Issue #43: Defined Contribution Plans

Tip of the Week

Some examples of Defined Contribution Plans include 401k plans, money purchase pension plans, and profit sharing plans. When discussing Pension Plans, many people feel that more companies are leaning towards Defined Contribution plans as opposed to company sponsored Defined Benefit Plans. There are advantages to having a Defined Contribution Plans, these include:

Tax Shelter until the plan is withdrawn
The employee can determine how much to contribute to the plan.
The Defined Contribution Plan is funded through pre taxed payroll deductions.
The plan is easy to understand

You should check with your employer about their Defined Contribution Plans.

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