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 ?
Neal Van Zutphen, a CFP based in Tempe, Phoenix, responded: "Saving monies outside of the employer-sponsored plan (after tax funds) is great for building emergency funds but does not necessarily have the same tax benefits and long-term funding benefits of an IRA or Roth IRA or 403(b)."
For small business employees, the Bureau of Labor Statistics National Compensation Survey shows that while 68 percent of private sector workers have access to an employer-sponsored plan, that number drops to 49 percent for individuals working for small businesses and 39 percent for part-time workers.
Upwards of 1.7 million New Jersey residents do not have an employer-sponsored plan, according to a statement from the Assembly Democrats Office citing data from American Association of Retired Persons.
About 152 million Americans are covered by an employer-sponsored plan.
The average premium for a family on an employer-sponsored plan for 2018 was more than $19,600.
Korean salaried workers are automatically subscribed to an employer-sponsored plan, and failure to pay the state-set premium results in a freeze of personal assets, almost always preceded by reduction of monthly wages in the corresponding amount of unpaid premiums.
Among those currently participating in an employer-sponsored plan, only 8% had stopped contributing or had decreased their contributions, compared with 45% to 52% of all others regardless of current access or participation history.
An "eligible employer-sponsored plan" means a "group health plan" that provides for medical care other than just a Health Insurance Portability and Accountability Act (HIPAA) excepted benefit (e.g., stand-alone vision and/or dental, fixed indemnity, and single disease plans).
Since hospital charges typically equate to about 40 percent of overall health care costs for an employer-sponsored plan, this piece alone can provide overall savings of 20 percent to 25 percent or more for an employer, all other costs being equal.
Because the default provides a safe harbor for participant-directed dollars into an employer-sponsored plan, the original legislation included that 90-day provision.
These measures mark progress, but only for the benefit for workers eligible to participate in an employer-sponsored plan. Which brings us back to those 70 million Americans without access to one.
Minimum essential coverage is coverage under a government-sponsored program (Medicare, Medicaid, Tricare, the Children's Health Insurance Program, etc.); an eligible employer-sponsored plan (defined in Regs.

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