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Defined Contribution Plan
What is it?
What is a Defined Contribution Plan?
Defined Contribution Plans provide an individual account for each participant. Benefits are largely based on the amount contributed; however, they are also affected by income, expenses, gains, and losses. Annual contributions (excluding earnings) to defined contribution plans may not exceed the smaller of $40,000 or 100% of a participant's compensation beginning in 2002. However, this individual percent limit is usually not attainable because the employer's deduction limit may not exceed 25% of eligible compensation.
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