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Defined Contribution Plan Definition

A defined contribution plan is a form of retirement savings that offers a tax-advantaged account for employees to contribute to. This can be done individually or with the help of their employer. Contributions and growth within the account are typically tax-free until withdrawal, with the exception of Roth options. This means that in defined contribution plans, the responsibility for investment risks and potential gains lies with the employee, not the employer. While some employers may offer matching contributions, the final decision to invest ultimately rests with the employee.

Home Equity

As a knowledgeable professor in the field of finance, it is important to understand the concept of home equity. This refers to the value of your home after subtracting all d...

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Matching Contributions

A crucial aspect of 401(k) accounts is the employer contribution, which is determined by the individual's own contributions. This means that for every dollar the individual ...

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Joint and Survivor Payment Option (or Annuity)

As a knowledgeable finance professor, it is important to understand the various options available for annuity payments. One such option is the joint and survivor option, whe...

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Excess Contribution

An IRA contribution that surpasses the maximum legal limit is considered an excess contribution and is subject to penalty taxes. These taxes are imposed for each year that t...

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