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Defined Contribution Plan Definition

A defined contribution plan is a form of retirement savings that offers a tax-advantaged account for employees to contribute to. This can be done individually or with the help of their employer. Contributions and growth within the account are typically tax-free until withdrawal, with the exception of Roth options. This means that in defined contribution plans, the responsibility for investment risks and potential gains lies with the employee, not the employer. While some employers may offer matching contributions, the final decision to invest ultimately rests with the employee.

Dollar Cost Averaging*

Dollar-cost averaging is a strategy for building wealth through investing that involves regularly purchasing a fixed dollar amount of securities at predetermined intervals, ...

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Tax-Free

A tax-free account that allows for the growth of earnings through interest, dividends, and capital gains without being subject to income tax. This type of account, such as a...

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Defined Benefit Plan Definition

A defined benefit plan, also known as a traditional pension plan, is a retirement plan where the employer guarantees a specific annual income for the employee based on vario...

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Excess Contribution

An IRA contribution that surpasses the maximum legal limit is considered an excess contribution and is subject to penalty taxes. These taxes are imposed for each year that t...

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