What requirement do money purchase plans share with defined benefit plans?

Money purchase plans and defined benefit plans both share the characteristic of having joint and survivor requirements. This means that when a plan participant passes away, the surviving spouse (or another designated beneficiary) is entitled to a benefit that is at least partially derived from the participant’s retirement benefit. This requirement is designed to protect the financial interests of the participant’s spouse, ensuring they have some level of support after the participant's death.

Defined benefit plans specifically feature this requirement to provide a guaranteed income stream to beneficiaries, and money purchase plans, while structured differently, also incorporate similar rules regarding survivor benefits. This consistency in the treatment of survivor benefits between the two types of plans reflects a shared emphasis on protecting the financial welfare of the beneficiary upon the participant’s death.

While minimum distribution rules, employer matching contributions, and mandatory employee contributions play significant roles in retirement plans, they do not uniformly exist across both plan types in the same way that joint and survivor benefits do.