Retirement Tool

In a defined contribution plan, the employee and/or the employer contribute to the employee’s individual account under the plan. The employee often decides how their accounts are invested. The amount in the account at distribution includes the contributions and investment gains or losses, minus any investment and administrative fees. The contributions and earnings are not taxed until distribution. The value of the account will change based on the value and performance of the investments.

Source: U.S. Department of Labor

This type of plan, also known as the traditional pension plan, promises the participant a specified monthly benefit at retirement. Often, the benefit is based on factors such as your salary, your age, and the number of years you worked for the employer.

Source: U.S. Department of Labor

Your employer’s retirement savings plan is an essential part of your future financial security. It is important to understand how your plan works and what benefits you will receive. Just as you would keep track of money that you put in a bank or other financial institution, it is in your best interest to keep track of your retirement benefits.

Those responsible for the management and oversight of your retirement plan must follow certain rules for operating the plan, handling the plan’s money and overseeing the firms that manage the money. You should also understand and monitor your retirement plan and your benefits.

• Different types of retirement plans;
• What information you can get about your plan;
• When and how you can receive retirement benefits;
• What to do if you have a question or find a mistake;
• The responsibilities of those who manage the plan and its investments;
• Your responsibilities to understand and monitor your plan; and
• Specific circumstances such as how a divorce or change of employer ownership may affect your retirement benefit.

Source: U.S. Department of Labor