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Money Purchase Pension Plans

In a Money Purchase Plan, the annual employer contribution is defined by a formula written in the plan document and is not discretionary.  The annual contribution limit for any participant can be set at any contribution percentage not to exceed 25% of his/her total compensation with annual limitations per participant. This plan also generally favors younger participants.  The benefit at retirement will be the accumulation of all contributions and earnings to a participant’s account.  This plan is not considered to be as flexible as a Profit Sharing plan and does not allow employee contributions.