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Defined contribution plan

a pension plan in which the retirement benefit is determined by how much is contributed to the plan, how it is invested, and the return on that investment. There is no way to estimate in advance how much the plan will provide at retirement. Cash contributions may be made by the employer, the employee (through salary deferral), or both, but any contributions coming from the employer will represent the extent of the employer's commitment to the employee's retirement income. In a defined contribution plan, investment risk and investment reward is assumed by the employee. Examples of this type of plan in the U.S. include Individual Retirement Accounts (IRAs) and 401 (k) plans.