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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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The new organisation will serve close to 2.4 m members in Massachusetts, Maine, Connecticut, New Hampshire and Rhode Island, offering employer-sponsored plans; Medicare and Medicaid plans; Qualified Health Plans; and plans for those who are dually eligible for Medicare and Medicaid.
Employer-sponsored plans allow participants to take advantage of an employer match, tax-deferred growth, and a dollar-cost averaging all in one."
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RPS has been helping boost retirement readiness through employer-sponsored plans for over five decades.
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Average employee premiums for all employer-sponsored plans rose from USD 509 in 2016 for single coverage to USD 532 in 2017 and from USD 1,236 to USD 1,272 for family coverage (a 4.5% and 3% increase respectively).
"The bottom line is that employer-sponsored plans are providing less income today than in the past," the report states.
Other sections of the new regulation package, Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit (RIN 1545-BL43), deal with matters such as how families should count their children's income when trying to qualify for PPACA premium tax credit subsidies, and how the premium tax credit program should treat babies born in the middle of a month.
The number of employers affected would be relatively small at the start but would grow over time as more employer-sponsored plans exceed the premium threshold that triggers the tax.
Without transparent accounting and recordkeeping and clear and enforceable "rules of the road." Imagine a world without employer-sponsored plans or a robust annuity industry.

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