Not sure which retirement savings program you have?
You have a defined contribution retirement plan if:
You defer a percentage of your salary to the plan and/or your employer makes contributions on your behalf. The benefit depends primarily upon the amount contributed over the duration of your working years and the earnings on the investments you select. (Typically with a defined contribution retirement plan, you’ll have an account in which you are responsible for selecting investment options where you would like your contributions applied.
Examples of defined contribution plans include 401(k) plans, profit sharing plans and money purchase pension plans.
You have a defined benefit retirement plan if:
Your employer makes contributions to the plan and invests the money to ensure that plan benefits are paid when promised. With this type of plan you have no investment decisions to make. The plan provides a monthly benefit at retirement. Your retirement benefits from the plan are determined, or "defined", by a fixed benefit formula. The benefit formula is usually based on how many years you work with your employer and/or your salary.
You have an annuity if:
You have an individual annuity if you have a contract issued by Minnesota Life in your name, which offers a guaranteed income for life. Annuities are typically purchased to provide income in retirement.