A Defined Contribution Plan is a type of retirement savings plan where both employees and employers can contribute a specific amount of money regularly. The contributions are typically invested in various financial instruments, and the final retirement benefit depends on the total contributions made and the investment performance over time. Common examples include 401(k) and 403(b) plans. Unlike a Defined Benefit Plan, which guarantees a specific payout at retirement, a Defined Contribution Plan does not promise a set amount. Instead, the retirement income varies based on how much has been contributed and how well the investments have performed, making it essential for participants to actively manage their savings.