Definition
Money Purchase Plan
A qualified defined contribution pension plan with required annual employer contributions.
Full definition
A money purchase pension plan requires the employer to contribute a fixed percentage of compensation each year. Because it is a pension plan, it can — when drafted to do so — host a 401(h) account.
Related terms
Availability, tax treatment, and plan design depend on the facts and circumstances of the employer, plan document, participant group, and applicable law. 401h.com provides general educational information only — not tax, legal, actuarial, investment, or ERISA advice. Consult qualified tax, legal, actuarial, and plan professionals.