Qualified Retirement Plans

A qualified retirement plan can allow certain tax advantages if it meets the criteria articulated in the Internal Revenue Code. Such a plan allows companies, and its employees, to enjoy tax deductions or deferrals, depending on the type of the plan, based on contributions made to the plan.

Employee contributions can be tax deferred, and are a great incentive to save for retirement. Some of the most recognizable plans include: 401(k), 403(b) and profit sharing plans.

There are multiple categories of qualified retirement plans including the following:

  • Defined Benefit Plan - This plan does not guarantee an employee a fixed level of benefits upon retirement. Instead, the business contributes a fixed amount into the employee account. Under this plan, an employee can only guess as to the exact amount of assets that will be available in the account after retirement.
  • Defined Contribution Plan - This is a plan in which a certain percentage or amount of money is set aside each year by a business for the benefit of the employees.
  • Hybrid Plan - This plan has the features of both a defined contribution plan and a defined benefit plan. As the workforce becomes more mobile in the new global economy, this type of plan is emerging as a workable option.

Reasonable and realistic retirement planning can help you to avoid outliving your retirement savings. Patrick Financial Group, L.L.C., with the help of your attorney, CPA and human resource director, can be an integral partner in making an informed decision about the creation and implementation of qualified retirement plans.

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