: How does my Defined Contribution pension plan work? I am a new employee and I was wondering if someone can help me understand what this defined contribution retirement plan means for me. My org says after 1 year of service

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A defined contribution plan is simply an employee-sponsored retirement plan where you and/or your employer can specify the contribution amount, and the benefit (what you get when you retire) is not defined (i.e., it's based on market returns and whatever you want to take out). A 401(k) and a 403(b) are kinds of defined contribution plans.

This is as opposed to a defined benefit plan, such as a pension, where you are given a particular benefit (such as, "0 a month for life once you turn 65").

In your case, it's possible that your employer has two different options for a defined contribution plan. One that the employer self-funds, and one that the employer matches your contributions. That's uncommon, but particularly in companies with very many young employees is not that rare; in fact, my company has a contribution plan where it contributes the entire amount and doesn't require us to contribute anything (but we still can, just with no match).

So it sounds like you get 3.5% of your salary until you're with the company 5 years put into a 403(b) type plan, then higher amounts after that, plus whatever you contribute matched up to 3% (so 1.5%). So if you fully participated and contributed 3%, you'd get an additional 5% for years 3-5, an additional 6% for years 6-10, and an additional 7.5% from years 11+.

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Contribution is what you're putting into your 401(k) from your paycheck. You spend 3% of every paycheck and your company pays an additional 50% of that into your 401(k)