Employer sponsored retirement plan

(redirected from Employer-Sponsored Retirement Plan)

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 ?
With all the talk of retirement crises, let's remember a simple fact that reinforces why we do what we do, and why we take the time to celebrate it: The most money that most Americans will ever amass in their lives is in the employer-sponsored retirement plan system.
(Note: An employer-sponsored retirement plan can specify the distribution method that beneficiaries must use.)
Sixteen percent of gig-only and 25 percent of gig-plus workers have assets in an employer-sponsored retirement plan, compared to 52 percent for their full-time counterparts, according to the research.
Under SB 1234, workers who do not have access to an employer-sponsored retirement plan will automatically contribute 3 percent of wages to the California Secure Choice Retirement Savings Trust.
The firm, founded by William Hurley, was acquired by Goldman Sachs as part of an effort to service approximately 45 million Americans who do not have access to an employer-sponsored retirement plan.
Only a half of private sector workers currently participate in any form of employer-sponsored retirement plan.
WORCESTER -- Employees who are lucky enough to have an employer-sponsored retirement plan are not spending as much time reviewing their quarterly statements compared to 10 years ago.
* Annuities are designed to help provide guaranteed income for all Americans who seek to ensure a stable and secure financial future, regardless if they access to an employer-sponsored retirement plan.
The participation rate reveals the number of employees contributing to the employer-sponsored retirement plan as compared with the number of employees eligible.
These numbers would be alarming enough if boomers--indeed, all working age Americans--had an employer-sponsored retirement plan. Problem is, many of them don't.
Expansion of the Saver's Credit: The current-law Saver's Credit permits low- and moderate-income individuals to take a tax credit of up to $1,000 (up to $2,000 if filing jointly) on voluntary contributions to an employer-sponsored retirement plan or an individual retirement arrangement.
In order to set up a SIMPLE IRA plan, the employer must not maintain another employer-sponsored retirement plan (including qualified plans, tax-sheltered annuities, and SEPs) and in the preceding year must have employed 100 or fewer employees earning at least $5,000.

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