1. 401(k) And Qualified Plans: Introduction
  2. 401(k) And Qualified Plans: Types Of Plans
  3. 401(k) And Qualified Plans: Eligibility Requirements
  4. 401(k) And Qualified Plans: Contributions
  5. 401(k) And Qualified Plans: Distributions
  6. 401(k) And Qualified Plans: Conclusion

By Denise Appleby

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 for defined benefit plansĀ 
  • 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, depending on the type of plan.
  • Employee compensation in excess of the compensation cap may not be considered for the purposes of making plan contributions.
  • An employer may contribute up to 25% of compensation to each eligible employee's account provided the contribution does not exceed $51,000.
  • Distributions before an employee reaches the age of 59.5 are taxed an additional 10%, unless the employee qualifies for an exception.

Related Articles
  1. Financial Advisor

    The 401(k) and Qualified Plans Tutorial

    Learn about eligibility requirements, contributions and distribution rules for these retirement plans.
  2. Retirement

    The Basics Of A 401(k) Retirement Plan

    This plan has become one of the most popular retirement options. Find out why.
  3. Retirement

    5 Lesser-Known Retirement And Benefit Plans

    These plans aren't widely used, but they fill a specific niche for employees in certain situations.
  4. Small Business

    Plans The Small-Business Owner Can Establish

    Don't hesitate to adopt a smart plan for you and your employees.
  5. Financial Advisor

    What's a Qualified Retirement Plan?

    Employers establish qualified retirement plans to help their employees save money.
  6. Understanding Rules on Defined Benefit Pension Plans

    Defined benefit plans offer advantages to both employers and employees. Employers must understand the federal tax rules when establishing these plans.
  7. Retirement

    How Does a Pension Plan Work?

    A pension plan is a savings plan maintained by an employer on behalf of its employees for their retirement.
  8. Financial Advisor

    The 4-1-1 on 403(b) Plans

    These plans resemble 401(k) plans in many respects, but are specially designed for nonprofit entities.
  9. 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.
  10. Financial Advisor

    SEP vs. Keogh Plans: Which is Right for You?

    SEP and Keogh plans each have their pros and cons. Here's how to choose which one is right for you.
Trading Center