Business and Personal Finance Dictionary

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• DEFINED CONTRIBUTION PLAN
  
  401(k), 403(b), 457, and profit-sharing plans are examples of defined contribution retirement plans offered by employers. The benefits that is, what you can expect to accumulate and ultimately withdraw from the plan are not predetermined, as they are with a conventional defined benefit pension, and vary according to how much is contributed to the plan, how it is invested, and what the return on that investment is. One advantage of defined contribution plans is that you often have some control over how your retirement dollars are invested. You choice may include stock or bond mutual funds, annuities, guaranteed investment contracts (GICs), company stock, cash equivalents, or a combination of these choices. An added benefit is that, if you switch jobs, you can often take your accumulated retirement assets with you. The downside is that there is no guarantee of the amount of retirement income you'll have available. The terms 401(k), 403(b), and 457 refer to the sections of the Internal Revenue Code where the plans are described.
  
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