defined contribution plan

Definition

A company retirement plan, such as a 401(k) plan or 403(b) plan, in which the employee elects to defer some amount of his/her salary into the plan and bears the investment risk.

Use this term in a sentence

Thanks to the defined contribution plan, Steve didn't have to pay into Social Security and instead used the alternate plan.

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The defined contribution plan was especially well received by the new employee who was anxious to begin investing in his retirement.

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When I asked my boss if our company offered a pension, he just laughed and told me that we only had a defined contribution plan and that saving for retirement was largely up to us.

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