Types of Retirement Account in US
Types of retirement accounts in USA.docxNotes: There are two types of employer-sponsored retirement plans: defined-benefit pension plans and defined-contribution plans:A defined-benefit plan is an employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history. The company administers portfolio management and investment risk of the plan. There are also restrictions on when and by what method an employee can withdraw funds without penalties. A Defined-contribution plan is funded primarily by the employee, where the participant defers a portion of gross salary and the company matches the contribution.The most common type of defined-contribution plan is the 401(k) plan.