401(k) vs. Pension Plan: What’s the Difference?

·4 min read
401(k) vs. Pension Plan: What’s the Difference?

A 401(k) and a pension are both employer-sponsored retirement plans. Each can be used by savvy investors to save for their retirement and can capitalize on contributions or benefits from their employer. The most significant difference between the two is that a 401(k) is a defined-contribution plan, and a pension is a defined-benefit plan.