2/17/2005
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DC Plans—401(k), 403(b): Characteristics
Employee usually responsible for investment.
Employer typically provides some contribution, possibly on a matching basis.
Investment management costs are generally higher.
Often vest faster than DB plans; employee owns the investment.
In general, feature better portability than DB.
“Actuarial” and “market” risks fall to employee.
Lack explicit inflation protection.
No disability or death benefits.
Make excellent supplements to DB plans.