Money Purchase Pension and Profit Sharing Plans

Money Purchase Pension Plans (MPPPs) and Profit Sharing Plans (PSPs) are both qualified plans as set forth by IRC 401(a) and fully funded by an individual's employer.

A Profit Sharing Plan is, as its name implies, a means by which an employer can share with employees discretionary contributions during profitable years of business. A PSP need not provide a determined formula for contributions. The employer can add to the plan based on company performance throughout the year though the contribution does not necessarily have to be tied to the profitability of the company.

Money Purchase Pension Plans are funded by fixed contributions that are related to the employee's eligible compensation. These contributions are mandatory.

These plans can be set up by corporations, government agencies, partnerships, small businesses and self-employed individuals.

Remember-an employer must adopt a PSP or MPPP. An employee cannot simply establish the plan because he or she wishes to.

    

Learn more

  Eligibility

  2008 Contribution Limits and Deadline

  Required Minimum Distributions (RMDs)

  Distributions