Your employer-sponsored retirement plan is a valuable benefit and a smart way
to invest for your future. As an eligible employee you have a limited window of time to choose
between two very different retirement plans - a
There are inherent benefits and risks
of each type of retirement plan
offered to you.
It's important that you consider the risks and benefits of each plan and your personal situation before you make a final election decision. Read
more information on both types of plans.
Defined Contribution Plans:
Education and investment knowledge -
Participant should understand investment
decisions and evaluate current circumstances
and risk tolerance.
Investment risks/returns - Participant
assumes the risk that poor market conditions
could negatively impact investment returns in the short
and long term.
Security - Unforeseen circumstances could deplete the account balance prior to retirement (such as financial hardship, plan loans, job changes, etc.)
Contributions and access - Contributions (and investment earnings) must be sufficient to provide desired level of assets and income after retirement.
The participant is responsible for continuing contributions to the plan (not diverting retirement assets to other current or pressing financial obligations).
Longevity and Cognitive Risks - Participant may
outlive the assets in your account, or lose the
cognitive abilities to invest in their account
Defined Benefit Plan:
Investments - Investments are the responsibility of the plan sponsor (not the participant).
Funding - The plan could be at risk of insufficient
funding by the plan sponsor.
Duration of employment - A shorter time of
employment would result in a smaller accrued
Vesting - It may take longer to be fully entitled
to benefits than in a defined contribution plan.
Tax savings - These are potentially limited
(no pre-tax deductions from salary).
Additional benefits - An early retirement subsidy is offered by some defined benefit plans after a participant completes
a specified period of employment, sometimes coupled with attaining a specified age. Important: Employees who have reached
(or are near) 'early retirement', as defined under the Institution's plan, could lose valuable early retirement subsidies
upon transition to a defined contribution plan.
This tool does not consider prior participation in
an employer-sponsored retirement plan. In making your decision, it's important to read all of the information provided concerning the use of this tool, including
the Methodology & Assumptions. You should consult a
financial advisor before making an irrevocable decision.
Important: Be sure to supplement your retirement
savings regardless of the plan you choose. You're
strongly encouraged to consult with a tax or financial
advisor prior to making any elections.
An employer-sponsored retirement plan that provides a specified benefit based on salary and years of service.
An employer-sponsored retirement plan that specifies a
rate of employer and/or employee contributions, usually defined as a percentage of salary. Future
benefits fluctuate and are based on the salary level, duration of contributions, investment earnings
and age at retirement.