ACCG Retirement Services: 401(a) Defined Contribution Plan
The 401 (a) Defined Contribution Plan is the second most popular primary plan. The 401(a) Defined Contribution Plan is very similar to the 401(k) pension plan offered by many businesses. Such plans can provide retirement benefits equal to 15 percent to 35 percent of an employee’s final, pre-retirement earnings. The 401(a) plan increased in popularity during the bull market of the 1990s and is now the second most popular primary retirement plan behind the traditional defined benefit plan.
What’s in a Name?
This plan is referred to as a “defined contribution plan” because the employer defines the monetary contribution that goes into the employee’s account. The retirement benefit is determined by the amount of contributions made by the employer and any investment earnings during the individual’s working career.
- Tax-deferred investment returns.
- Diversified, high quality investment options.
- Participant directed investment selection.
- Transferable to other plans after termination.
- Other benefits are available in addition to Social Security.
Employees will need to designate a beneficiary, or beneficiaries, so that their account balance will be paid to the designated individuals in the case of death. Beneficiaries will have immediate access to all of the money unless the employee receives monthly payments from an annuity. Beneficiaries are strongly encouraged to contact ACCG Retirement Services representatives for a complete description of options.