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Money Purchase

Employer s commit to a fixed annual funding. You can contribute up to 25% or $40,000, whichever is less, of each eligible employee's compensation. No employee contributions are allowed in this type of plan. Contributions, in general, can be allocated to participants in two different ways:




Every employee receives the same percentage of covered compensation.




Employees who have earnings exceeding, typically, the social security wage base receive extra benefits on their earnings over the social security wage base. For example, employees could receive a contribution of 3% of earnings up to the social security wage base, plus 6% of earnings exceeding the social security wage base.

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