Types of Retirement Plans

There are basically two types of retirement plans: Defined Benefit Plans (DBP) and Defined Contribution Plans (DCP).

Defined contribution plans are retirement accounts such as 401(k), 403(b) and IRAs. There are employer-sponsored DCPs and personal retirement plans.

Employer-sponsored defined contribution plans include such plans as 401(k), 403(b), 457 plans, money purchase plans, thrift plans, tax-sheltered annuities, profit-sharing plans, employee stock ownership plans (ESOP), deferred compensation plans, SEP-IRA, Simple IRA and SAR-IRA.

Employer-sponsored defined benefit plans are pensions. Government-sponsored defined benefit plans are also pensions.

Personal retirement plans are annuities, traditional IRAs, rollover IRAs (IRRA) and Roth IRAs.

Some people categorize Social Security as a retirement plan, but given the current state of the Social Security system, that is debatable.