Qualified Pension or Profit-Sharing Plan

Qualified Pension or Profit-Sharing Plan

An employer-sponsored plan that meets the requirements of IRS Code section 401. If these requirements are met, none of the employer's contributions to the plan are taxed to the employee until distributed to him. The employer is allowed a deduction in the year the contributions are made.
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Further, because H is paying the income tax out of his own pocket, in effect the $121,000 is growing income tax free as well, similar to a qualified pension or profit-sharing plan.
Under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA), excise taxes may be imposed on a qualified pension or profit-sharing plan that engages in "prohibited transactions," i.
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