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 ?
One of the easiest ways to increase your tax refund or reduce your balance due is to contribute to an individual or employer-sponsored retirement plan.
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If you're not contributing the maximum amount to your employer-sponsored retirement plan, you may want to use at least part of your bonus to add to your account, especially if you are currently contributing less than the maximum amount matched by your employer.
employer-sponsored retirement plan participants to manage their plan
There are several measures Americans might consider immediately, including: fully funding their tax-deferred employer-sponsored retirement plan, opening a tax-deferred IRA, investing in tax-free municipal bonds and municipal bond funds, and pursuing investments that produce capital gains -- such as stocks and stock funds -- which will be taxed at a rate lower than interest and dividend income.
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workers do not even have access to an employer-sponsored retirement plan, largely because they work for small companies that do not sponsor such plans.
At this point, clients also should contribute to any available 401(k) account--even if there is no employer match--and to any other employer-sponsored retirement plan that allows pretax contributions.
457 or similar employer-sponsored retirement plan, without being subject to the Sec.

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