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.

Panel of Experts Discuss Annuities in 401k Plans

The use of annuities in 401k plans is an issue receiving quite a bit of attention lately. Experts, policy makers and industry analysts understand the clear need for guaranteed income options for people who have their savings built-up in 401k plans and individual retirement accounts (IRAs): “I think one of the top goals of the new (Obama) administration is to find a way to annuitize or at least guarantee or secure some sort of income in retirement,” said Mr. Davies. “That's really the final...
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Hybrid 401(k)s that Include Annuities Slow to Gain Market Traction

Barclays and other large asset managers roll-out sophisticated defined contribution plans that have annuity options built into the plans. Employers, however, have been slow to adopt the new programs. If you're approaching retirement right now, there's no easy fix for your portfolio. But if you are in midcareer, you may soon have a chance to structure your 401(k) in a much different way. A dozen or so asset managers and insurers, including AllianceBernstein, AXA, Barclays Global Investors, John...
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