Defined-contribution plans place retirement savings into an employee’s hands.
What is a defined-contribution plan?
Defined-contribution plans place retirement savings into an employee’s hands. Workers allocate some of their paycheck into an investment account--like a 401(k)--where they can buy investments like stock and bond funds. Employers often offer a company match, where they contribute some money to the account.
These plans can help employees grow a significant retirement nest egg if started early enough. Plus, defined-contribution plans are portable, meaning if workers switch companies, their contributions (and their company’s if vested) move with them.