|
| |
Conclusion
A qualified plan is established by an employer to provide retirement benefits for employees and their beneficiaries. Qualified plans can come in a few different flavors.
Let's recap:
- A qualified plan may be a defined-benefit plan or a defined-contribution plan.
- Retirement benefits are based on compensation, years of service and age.
- Varieties of qualified plans include profit-sharing or stock-bonus plans, money-purchase pension plans , 401(k) plans, age-weighted plans and employee stock ownership plans (ESOPs).
- Any business, including sole proprietorships, partnerships, corporations and government entities may adopt a qualified plan.
- A qualified plan may be funded with employer contributions and employee contributions.
- An employer may contribute up to 25% of compensation to each eligible employee's account providing the contribution does not exceed $46,000.
- Distributions before an employee is not over the age of 59 1/2 are taxed an additional 10%.
|
| | |
|
|
| |
| |
 | |
© Copyright 2006 Investopedia Inc. All rights reserved. |
|
|
|
