Alliance Benefit Group of Michigan

30100 Telegraph Road, Suite 170, Bingham Farms, Michigan 48025 | Ph: 248-540-5300 | Fax: 248-540-5318

Money Purchase Plan

A money purchase plan is one in which the employer contributes a defined amount each year. The allocation may be a fixed percentage of each participant’s salary, a fixed dollar amount or integrated with social security. Contributions to the plan are mandatory and allow no discretion to the employer.

Historically, money purchase plans had been favored by employers who wish to maximize contributions under a defined contribution plan. However, recent law changes have increased the maximum contributions permitted to a profit sharing plan to equal that to a money purchase plan.

Currently, money purchase plans are used by employers who wish to have a pre-defined, fixed obligation.

Alliance Benefit Group, its subsidiaries, and all employees thereof, are not engaged in the practice of rendering legal services, accounting or other professional advice. Although care has been taken to provide accurate guidance, the preparer of this communication disclaims any implied or actual warranties as to the accuracy of any material herein and all liability with respect thereto.

IRS CIRCULAR 230 DISCLOSURE: As stated above, Alliance Benefit Group does not provide tax advice. To the extent this communication (including attachments), mentions or discusses any tax matter, it is not intended or written to be used, and cannot be used by the recipient or any other person, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party the matter addressed herein. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.