Money Matters: Qualified Retirement Plans
Today we're going to talk about Qualified Retirement Plans. And just exactly what is that?
Well, that's actually just a term, a broad term defining a congressionally approved retirement plan for employers. Inside of that there's two basic broad types of plans that are considered qualified plan for the employer. There's a Defined Contribution and a Defined Benefit. And probably the most popular we've all heard is the 401k's. So, a qualified plan the most popular obviously is the 401k. Some other things that would fit underneath that would be a Profit Sharing Plan, a Purchase Plan, an ESOP and those are all qualified plans.
How does it benefit not only the employed to have a plan like that but perhaps also the business or company that's doing it.
Well, there are some tax benefits for the employer. The money I put in on your behalf, I get to deduct if I make a matching contribution so I'm deducting as an employer. As an employee, I get to take it out of my check. I can withhold money, put it in the 401k . I deduct it and any matching as well. I don't have to claim it until I pull it out.
So, it's good not only with the employee but in many cases the employer as well.