Employer sponsored retirement plan

(redirected from Employer-Based Pensions)

Employer Sponsored Retirement Plan

A retirement plan in which both an employer and an employee make contributions into an account each month. The contributions are invested on behalf of an employee, who may begin to make withdrawals after retirement. Typically, employer sponsored retirement plans are tax-deferred, meaning that the employee does not pay taxes on the funds in the pension until he/she begins making withdrawals. However, some plans are not tax-deferred, and, instead, employees make tax-free withdrawals. Employers are not legally required to offer retirement plans, though most major companies do. Plans may have defined contributions, defined benefits, or both. See also: 401(k), IRA.

Employer sponsored retirement plan.

Employers may offer their employees either defined benefit or defined contribution retirement plans, or they may make both types of plans available.

Any employer may offer a defined benefit plan, but certain types of defined contribution plans are available only through specific categories of employers.

For example, 403(b) plans may be offered only by tax-exempt, nonprofit employers, and 457 plans only by state and municipal governments. SIMPLE plans, on the other hand, can only be offered by employers with fewer than 100 workers.

Corporate employers who contribute to a retirement plan can take a tax deduction for the amount of their contribution and may enjoy other tax benefits. However, the plan must meet certain Internal Revenue Service (IRS) guidelines.

Offering a retirement plan may also make the employer more attractive to potential employees. However, employers are not required to offer plans. If they do, they can make the plan as generous or as limited as they choose as long as the plan meets the government's non-discrimination guidelines.

References in periodicals archive ?
In the last year, the Government has begun to put in place plans for the future: it has proposed a more generous and simpler state pension system and the introduction of automatic enrolment into new employer-based pensions known as personal accounts.
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Research has also shown that of the 350,000 UK companies that have set up stakeholder schemes, 82 per cent of those remain 'empty boxes' with no members, while only 13 per cent of employer-based pensions have contributions from employers.
Of the 350,000 UK companies which have set up stakeholder schemes, 82 per cent of those remain "empty boxes" with no members, while only 13 per cent of employer-based pensions have contributions from employers.
Securing Employer-Based Pensions is a collection of papers and commentaries that seeks to help policymakers analyze retirement income structures of both developed a nd developing nations.
Most personal wealth other than housing is accumulated through employer-based pensions.
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It especially helps those who don't have access to employer-based pensions to supplement their Social Security and ensure that they don't spend their retirement dwindling down their assets when they are most needed.
The research also showed that of the 350,000 UK companies which have set up stakeholder schemes, 82pc of those remain "empty boxes" with no members, while only 13pc of employer-based pensions have contributions from employers.
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