Are retirement plans contributory or noncontributory?

A contributory plan may result in larger benefits, and many feel that contributions by employees heighten employee interest. Its disadvantage is that under present tax laws an employee's dollar does not buy as much security as does the dollar contributed by an employer, since, generally, employee contributions are not deductible. Furthermore, the employee contribution plan adds considerably to the bookkeeping.

Under ERISA, an employee's benefit derived from his own contributions is 100-percent vested immediately and is nonforfeitable. Such benefits cannot be taken away from the employee under any circumstances.