Definition
An employer-sponsored qualified-retirement-plan, established by an employer for the benefit of it’s employees and their beneficiaries.
Money purchase pension plans are defined contribution plans , and are funded with employer contributions
Contributions to money purchase pension plans are mandatory
Earnings in a money purchase pension plan accrue on a tax-deferred basis . Contributions and earnings are taxable to the participant when withdrawn from the participant’s money purchase pension account
Referring Cite
IRC § 401(a)
Additional Helpful Information
- Employer contributions to money purchase pension plans are subject to the deductibility limit of IRC § 404, i.e. 25% of eligible compensation
- Employer contributions to money purchase pension plans can be subject to a vesting schedule
- Participants must experience a triggering event in order to be eligible to make withdrawals from their money purchase
