Employer sponsored retirement plan

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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 ?
However, should an employee be satisfied with their current provider network that they have with their individual plan, the premiums for the same if not better coverage through an employer sponsored plan will come in 26 percent-28 percent lower.
For example, the excise tax (Cadillac Tax) was expected by the Congressional Budget Office to produce over $250 billion in tax revenue; however, 75 percent of that revenue was forecast to originate from employers that increased employee compensation following their exit from an employer sponsored plan. Although some employers are leaving the market, these forecasts did not account for employer loyalty to their employees.
"While policymakers are attempting to solve for wide-ranging issues, the proposed solutions, in many cases, encourage plan participants to leave assets in an employer sponsored plan, rather than rolling over into an individual retirement account (IRA) when they leave their employer.
The assets associated with these former employer sponsored plan accounts represent about 35% of the total investable assets among this population of investors--and "this is important because by definition these assets are eligible to be rolled over into an IRA," York said.
In addition, we ask you to ensure affordable coverage for individuals with health insurance, including Medicare, Medicaid, and individual and employer sponsored plans.
Emphasis and assistance in the following areas: Minimization of Taxes, Asset Protection Strategies, Professional Money Management, Wealth and Estate Planning Strategies, Divorce Planning and Settlements, Life Insurance and Long Term Care, Business Succession Planning, SEP, 401(k), IRA, Retirement Income, Inheritance Planning, Rollovers/Transfers from employer sponsored plans such as DROP, FRS, 403(b), 457, Pension Plans.
"Instead of providing a set of pre-defined health insurance benefits through one or two employer sponsored plans, employers will provide a fixed amount of funding.
Lisa How many of the 75 percent with employer sponsored plans have state or government pensions?

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