401(k) And Qualified Plans: Conclusion
AAA
  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

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 plans 
  • 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.

  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
RELATED TERMS
  1. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  2. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  3. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  4. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  5. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  6. Medigap

    Also called Medicare Supplement Insurance, Medigap is health ...
  1. How do gains from my 401(k) figure into my taxable income?

    Understand what a 401(k) is and how it's used to help employees save for retirement. Learn how gains from a 401(k) figure ...
  2. Does my employer's matching contribution count towards the maximum I can contribute ...

    Maximize 401(k) contributions on your own without fear; employer contributions are separate and do not hinder you contributing ...
  3. How much will an employer generally contribute to a 401(a) plan?

    Find out how much employers may contribute to an employee's 401(a) retirement plan and why this amount can vary so widely ...
  4. When can benefits be received from a provident fund?

    Find out when participants in provident funds can begin receiving benefits, including how funds can be used to finance important ...

You May Also Like

Related Tutorials
  1. Retirement

    Consolidating Your Retirement Money

  2. Retirement

    Analyzing The Best Retirement Plans And Investment Options

  3. Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  4. Retirement

    The Complete Guide To Retirement Planning For 50-Somethings

  5. Trading Systems & Software

    How To Analyze Corporate Bonds With Bloomberg Terminals

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!