A money purchase plan is a type of retirement plan in which the employer puts away a set amount of money into each employee’s retirement fund. Contributions are made annually, and unlike other retirement plans where the amount put in varies, a money purchase plan requires the amount to be the same from one year to the next regardless of total profits. Contributions made by employers are tax-deferred until the funds are withdrawn. Under this plan, employees cannot contribute money to their own personal retirement accounts. This type of retirement plan is good for businesses looking to attract the best employees from other organizations.
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