Current tax deduction for contributions made to the plan. No commitment to fixed contribution formula. Provides identifiable incentive to employees to increase profitability. Top of Page Money Purchase Pension Plan Specific percentage of compensation is contributed for each employee. Contributions are not dependent on profits.
Employees receive contribution regardless of profitability.
Top of Page Defined Benefit Plan Benefit to be received at retirement is specified by a definite formula. Benefits measured by and based on factors such as years of experience and compensation earned by employee. Definite program for funding of benefits followed during participant's service. Actuary determines contributions necessary. Benefits can be projected at any point in time.