 |
 |
A Target Benefit Plan is a hybrid or cross between a defined benefit plan and a money purchase pension plan. It is like a defined benefit plan in that the annual contribution is determined by the amount needed each year to accumulate (at an assumed interest rate) a fund sufficient to pay a projected retirement benefit (the target benefit) to each participant on reaching retirement age. The contribution is required each year even if no profits exits. The participant may contribute on an after tax basis. All employee contributions are subject to anti-discrimination rules. Target Benefit Plans are subject to maximum annual addition limits.