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 ?
This type of individual retirement account will grant you access to a broader array of investments that often have lower fees than employer-sponsored plans.
If the employer-sponsored plan fails to bear at least 60% of the total allowed costs of benefits provided under the plan, it is not providing minimum value, and an employee may be eligible to receive a federal subsidy (Prop.
Persons or families who are not eligible to participate in an employer-sponsored plan may qualify for cost-shared subsidies if their income is equal to or less than four times the federal poverty level and their cost for coverage is at or less than 9.
For a typical employee in an employer-sponsored plan, these changes, along with a few prescriptions and maybe an ER visit, can easily add $2,000 to their real, annual cost for healthcare coverage.
To foster greater retirement savings among workers who do not have access to an employer-sponsored plan, proposals have been made at the federal level for an "automatic IRA" and at the state level for state-based programs.
who participate in some kind of employer-sponsored plan.
However, black men are 12% more likely to have stocks outside of an employer-sponsored plan.
Creditable coverage means that "the employer-sponsored plan would pay at least as much as the Part D program for all of their Medicare eligible employees.
A large proportion of the self-employed acquire coverage in health and dental plans by piggybacking on the employer-sponsored plan of a spouse or close relative.
Nearly one-half of beneficiaries with incomes over $45,000 per year have an employer-sponsored plan versus less than 20 percent of those with incomes under $15,000.
As of January 1, 2001, employees will be able to transfer retirement assets from one employer-sponsored plan to another or to an IRA.

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