Company Provided Qualified Retirement Plans

Your company may decide to offer it's employees a qualified retirement plan. Sole proprietors, partnerships and corporations can set up qualified retirement plans.  A qualified retirement plan is one that meets certain IRS provisions and either:

• provides retirement income to employees or


• provides a deferral of income to employees.

Qualified Retirement Plans are either:

• Defined Contribution Plans (like profit-sharing plans or 401(k) plans) or


• Defined Benefit Plans

Defined Contribution Plans provides benefits to the participant in the plan based largely on the amount contributed to that participant's account.

Defined Benefit Plans are any plans that are not defined contribution plans.  The employer would make contributions in the amount needed to provide certain future benefits to participants.

Qualified Plans have the following things in common:

• Employers can deduct the contributions they make and employee elective deferrals, subject to limitations.


• An employee must be vested in benefits under a minimum vesting schedule.


• The plan is for the exclusive benefit of employees or their beneficiaries.


• Participants pay no current income tax on amounts contributed.


• Earnings from contributions accumulate tax free until they are withdrawn.


• Some withdrawals may qualify for tax-free rollover treatment into another qualified plan or IRA

Tax law can change daily, please talk to your tax adviser before making decisions that will affect your taxes.