Defined Contribution Plan

A defined contribution plan usually is a type of retirement plan that an employer establishes for its employees.  In this plan, an employee selects various investments (e.g., mutual funds and other investments) and makes pre-tax contributions to those investments with deductions from the employee’s salary.  Often the employer will make contributions to the employee’s investments, too.  Examples of defined contribution plans include 401(k) plans, 403(b) plans, and 457 plans.