Group Retirement Plans

Retirement plan basics include the

• • Plan sponsor
• • Plan administrator
• • Plan participants
• • Plan document
• • Summary plan description

Qualified retirement plans offer

• • Tax incentives
  • o Employers and participants can reduce their taxable income.
  • o Employer contributions to a traditional qualified plan on behalf of a participant are taxable at withdrawal.
  • o Tax-deferred investment earnings.

Employee Retirement Income Security Act (ERISA) requirements for qualified retirement plans include

• • Vesting schedules
  • o Graded vesting (or step vesting)
  • o Cliff vesting

Types of benefit formulas include

• • Defined benefit (DB) plan: The benefit is determined in advance.
• • Defined contribution (DC) plan: The contribution is determined in advance.

Pension plan

• Defined benefit formula

401(k) plan: A retirement plan that allows employees to make pre-tax contributions to the plan through salary reduction.

• • Pre-tax contributions
• • Matching contributions
• • Withdrawals
• • Loans

Roth 401(k) plans: After-tax contributions and tax-free distributions of contributions and earnings.

Two types of plans similar to the 401(k):

• • 403(b) plan
• • 457 plan

Profit Sharing Plans

Stock Bonus Plans

Qualified retirement plans for small employers include

• • SEP
• • SIMPLE IRA
• • SIMPLE 401(k)
• • Keogh Plan