Qualified Plans

A Defined Contribution Plan is a tax-qualified retirement plan in which contributions are made by the employer into retirement accounts for participants.

• Participants can also be provided with the opportunity to make contributions through salary deferrals.
• The amount the employer contributes is specified by the plan and is generally based on employee compensation.
• A Defined Contribution Plan does not specify the benefit in retirement that will be available to the participant, only guidelines around the size of the contribution.  

A Defined Benefit Plan is also a tax-qualified retirement plan, but contributions are made entirely by the employer with no option for employee deferrals.

• In a Defined Benefit Plan, the plan specifies an amount that each participant will receive at retirement and contributions made into the plan must be sufficient to achieve that benefit as promised.