You authorize your employer to deduct from your gross salary a fixed amount each pay period, lowering your taxable income. Profit-sharing plans . Some companies make additional contributions by sharing a percentage of their profits with employees. Employee stock purchase plans .
Some companies offer discounts to employees on the companies' publicly traded stock.
Oracle Corp., for instance, sets aside shares for employees to buy at a 15 percent discount to the market price. The Pension Benefit Guaranty Corp. does not guarantee defined contribution plans since employees have responsibility to fund their own retirement plans. Range of investment choices . Tax-reduction features . Most defined contribution plans are tax-deferred retirement vehicles.