fbpx
The article may contain affiliate links from partners. The words, opinions, and reviews are our own. Learn how we make money to support our financial wellness mission.

A defined contribution plan is a type of retirement plan in which the employer, employee, or both make contributions on a regular basis.

The most common types of employer-sponsored retirement savings plans are called 401(k), 403(b) or 457 plans – so named for the Internal Revenue Service tax codes that govern them – and Thrift Savings Plans. Each has a different target audience:

  • 401(k) plans are offered to employees of public or private for-profit companies.
  • 403(b) plans are offered to employees of tax-exempt or non-profit organizations, such as public schools, colleges, hospitals, libraries, philanthropic organizations, and churches.
  • 457 plans are offered to employees of state and local municipal governments (and some local school and state university systems).
  • Thrift Savings Plans are offered to federal civilian and uniformed services employees.

Main Menu