Defined Contribution Plans

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 benefit plan for your company.