A target benefit plan is a defined contribution plan that is a cross between a defined benefit plan and a money purchase plan. The contribution is determined by the amount needed each year to accumulate at an assumed rate of interest, a fund sufficient to pay a projected retirement benefit at normal retirement date. The contribution is required, similar to a money purchase plan. This plan is useful for benefiting the older highly compensated employee who wants to have a defined contribution plan.

An example of a simple target benefit study can be viewed below:

Target Benefit Study 1

Target Benefit FAQs