saying something can only go to a certain extent while taking action from the words that your saying can be louder and more powerful than anything your saying.
Defined contribution plans are funded primarily by the employee, called the participant, with the employer matching contributions to a certain amount. The most common type of defined contribution plan, which many people are familiar with, is a 401(k) plan. A participant may elect to defer a portion of his gross salary via a pretax payroll deduction to the plan, and the company matches according to its summary plan description, or SPD.
Money purchase plans have required contributions. The employer is required to make a contribution to the plan each year for the plan participants. With a money purchase plan, the plan states the contribution percentage that is required. For example, letâs say that your money purchase plan has a contribution of 5% of each eligible employeeâs pay. You, as the employer, need to make a contribution of 5% of each eligible employeeâs pay to their separate account.