Defined Contribution Plan
A defined contribution plan (DC) is a pension plan such as a 401(k) where the plan participant such as an employee assumes responsibility for directing plan assets among various investment options. In contrast to a defined benefit plan, the participant assumes market risk under a defined contribution plan. In addition, the participant assumes responsibility for converting accumulated assets into a stream of income when they retire. In other words, assets need to accumulate during working years and then the participant is responsible for figuring out what to do with that sum of money when they retire. The number of defined contribution plans has increased significantly over the past 20 years.
The Business Week Cover Story on Retirement--Life-Cycle in Theory but Status Quo in Practice
Business Week just ran a timely cover story on the post-financial crisis retirement landscape. Portions of the feature present a remarkable contradiction. While there is a clear endorsement of...
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How do pension plans work?
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