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A defined contribution plan allows a company
to define the contribution it will make to the plan and how
the contribution will be allocated among the eligible employees.
Separate account balances are maintained for each employee.
Some plans may permit employees to make contributions on a
before-and/or after-tax basis.
The employee's account grows through employer contributions
and investment earnings. The employee's retirement, death
or disability benefit is not pre-determined but rather based
on the amount in the separate account at the time the distribution
is payable.
For 2002 and 2003, the maximum annual amount that may be credited
to an employee's account (taking into consideration all defined
contribution plans sponsored by the employer) is limited to
the lesser of 100% of compensation or $40,000.
Contact us to help set up a defined contribution plan
for your company.
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