Employer-Sponsored Plan

What is an 'Employer-Sponsored Plan'

An employer-sponsored plan is a type of benefit plan that an employer offers for the benefit of his/her employees at no or a relatively low cost to the employees. If employees participate in the plan, they will benefit from its low-cost method of obtaining discounted services. The benefit to the employer is that initiating these plans usually has some tax-deductible component, and sponsoring benefits is generally a good method of retaining valuable employees.

BREAKING DOWN 'Employer-Sponsored Plan'

Different classes of employer-sponsor plans include retirement saving plans and group healthcare plans.

Employer-sponsored retirement savings plans are useful for the employees because it presents them with an automatic savings device, provides tax breaks and, in some cases, offers free money in terms of employers matching the employee's contributions. Some examples of retirement employer-sponsored savings plans are 401(k)s and the some forms of IRAs.

Group healthcare plans are often seen as a premium for employees due to the rising cost of healthcare services.

RELATED TERMS
  1. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  2. Corporate Pension Plan

    A formal arrangement between a company and its employees - or ...
  3. Employee Contribution Plan

    A company-sponsored retirement plan where employees may elect ...
  4. Benefit Allocation Method

    The benefit allocation method is a means of funding a pension ...
  5. Flat Benefit Formula

    A method of calculating an employer's contribution to an employee's ...
  6. 419(e) Welfare Benefit Plans

    A type of employer-sponsored employee welfare benefit plan. 419(e) ...
Related Articles
  1. Personal Finance

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  2. Retirement

    This Is Why Your Employer Should Offer a 401(k)

    Understand the unique benefits that come with a small business offering a retirement savings plan such as a 401(k) to current and future employees.
  3. Term

    What's a Qualified Retirement Plan?

    Employers establish qualified retirement plans to help their employees save money.
  4. Taxes

    401(k) And Qualified Plans: Types Of Plans

    By Denise ApplebyDefined-Benefit PlansUnder a defined-benefit plan, employees' retirement benefits are predetermined by their compensation, years of service and age. For example, the plan ...
  5. Saving and Spending

    Deferred Compensation Plans for Nonprofits

    Learn about the two types of deferred compensation plans that nonprofit companies can use to allow high-ranking employees to increase their retirement savings.
  6. Taxes

    401(k) And Qualified Plans: Conclusion

    By Denise ApplebyA 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 ...
  7. Professionals

    What's Your Employee Value?

    Have you ever wondered how much you're worth to your boss? Here's a method for calculating that value.
  8. Retirement

    Retirement Savings for Small-Business Employees

    President Obama’s new budget gives high priority to improving retirement plans, especially for employees of small companies.
  9. Retirement

    The Defined-Contribution Plan: A Flawed Concept

    After a career marked by loyalty to the firm, the promised pension plan benefits aren't materializing for many plan participants.
  10. Retirement

    Tough Times: Should You Dip Into Your Qualified Plan?

    401(k)s, pensions and profit-sharing plans can be a source of cash, but there are consequences to this option.
RELATED FAQS
  1. What is the best retirement plan option for a physician with her own practice, employees ...

    It is very unlikely that you will find a qualified plan or an IRA-based plan that will allow the employer to exclude other ... Read Answer >>
  2. What are qualified retirement plan types?

    Understand the different types of qualified retirement plans and what they mean in terms of employee and employer contribution ... Read Answer >>
  3. How can an entrepreneur save for retirement?

    Learn about the retirement savings plan options for entrepreneurs and small business owners, including administration and ... Read Answer >>
  4. What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase ... Read Answer >>
  5. Who is eligible for a Teacher Retirement?

    Learn about the retirement option, the Teacher Retirement System, offered to teachers and other public school employees, ... Read Answer >>
  6. What is the difference between qualified and non-qualified plans?

    Qualified and non-qualified retirement plans are created by employers with the intent of benefiting employees. The Employee ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center