What type of contribution does the Government Finance Officers Association (GFOA) recommend employees make to their defined contribution plans?

The Government Finance Officers Association (GFOA) recommends that employees contribute a percentage of their pay to their defined contribution plans. This approach is beneficial as it aligns contributions with the individual's earnings, ensuring that those who earn more contribute more to their retirement savings. This percentage-based contribution often helps foster a more equitable system, as it takes into account varying income levels and encourages consistent saving behavior relative to pay.

Additionally, using a percentage of pay as the basis for contributions can simplify the process of adjusting contributions over time, allowing employees to save more as their income rises. This method also works well with automatic payroll deductions, making it easier for employees to invest for their future without needing to make manual contributions each pay period.

The other options do not provide the same level of alignment with personal financial growth as a percentage-based contribution does; therefore, they do not meet the GFOA's best practices for encouraging effective retirement savings.