A 401(a) plan is an employer-sponsored money-purchase retirement plan funded with contributions from the employee, the employer, or both.

Retirement Topics - Exceptions to Tax on Early Distributions

A 401(a) plan is an employer-sponsored money-purchase retirement plan that allows dollar or percentage-based contributions from the employer, the employee, or both. A 401(a) plan is an employer-sponsored money-purchase retirement plan that allows dollar or percentage-based contributions from the employer, the employee, or both. If an individual leaves an employer, they do have the option of transferring the funds in their 401(a) to a 401(k) plan or individual retirement account (IRA).
Employers can form multiple 401(a) plans, each with distinct eligibility criteria, contribution amounts, and vesting schedules. Employer contribution options include the employer paying a set amount into an employee's plan, matching a fixed percentage of employee contributions, or matching employee contributions within a specific dollar range. The employee can withdraw funds from a 401(a) plan through a rollover to a different qualified retirement plan, a lump-sum payment, or an annuity.

401(a) Plan

A 403(b) plan is similar to a 401(k) but is designed for certain employees of public schools and tax-exempt organizations among other differences.

Income ranges for determining IRA eligibility change for 2021

COLA Increases for Dollar Limitations on Benefits and Contributions

Retirement Topics - 403(b) Contribution Limits

Publication 571,Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations

Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers

I. SECTION 403(b) TAX-SHELTERED ANNUITY ARRANGEMENTS

Retirement Plans FAQs regarding 403(b) Tax-Sheltered Annuity Plans: Coverage and Nondiscrimination

Table of Contents
Expand Both also offer Roth options and require participants to reach age 59½ to withdraw funds without incurring an early withdrawal penalty.﻿﻿ Like a 401(k), the 403(b) plan offers $6,500 catch-up contributions for those age 50 and older in 2020 and 2021.﻿﻿ Unlike a 401(k) As with a 401(k), funds withdrawn from a 403(b) plan before age 59½ are subject to a 10% tax penalty, although you may avoid the penalty under certain circumstances, such as separating from an employer at age 55 or older, needing to pay a qualified medical expense, or becoming disabled. What Is 403(b) Plan?
Understanding 403(b) Plan
Advantages of 403(b) Plan
Disadvantages of 403(b) Plan Earnings and returns on amounts in a regular 403(b) plan are tax-deferred until they are withdrawn and tax-deferred if the Roth 403(b) withdrawals are qualified distributions.

403(b) Plan

457 plans are non-qualified, tax-advantaged, deferred compensation retirement plans offered by state, local government and some nonprofit employers.

Generally speaking, 457 plans are non-qualified, tax-advantaged, deferred compensation retirement plans offered by state governments, local governments, and some nonprofit employers. There are two types of 457 plans:
**457(b)**: This is the most common 457 plan and is offered to state and local government employees.
**457(f)**: A plan offered to highly compensated government and select non-government employees. Generally speaking, 457 plans are non-qualified, tax-advantaged, deferred compensation retirement plans offered by state governments, local governments, and some nonprofit employers. However, any early distribution from a 457 plan whereby the funds were a result of a direct transfer or rollover from a qualified retirement plan—such as a 401(k)—would be subject to the 10% penalty tax. 1:34
Notably, 457 plans are similar in nature to 401(k) plans, only rather than being offered to employees at for-profit companies, they cater to state and local public workers, together with highly paid executives at certain nonprofit organizations, such as charities.

457 Plan

An after-tax contribution is a deposit into a retirement account of money that has been taxed in the year in which it was paid into the account.

An after-tax contribution is money paid into a retirement or investment account after income taxes on those earnings have already been deducted. When opening a tax-advantaged retirement account, an individual may choose to defer the income taxes owed until after retiring, if it is a so-called traditional retirement account, or pay the income taxes in the year in which the payment is made, if it is a Roth retirement account. Since the funds in the account are separated into taxable and non-taxable components, figuring the tax that is due on the required distributions is more complicated than if the account holder had made only pre-tax contributions. (Actually, you can have more than one account, or a post-tax and a pre-tax account, but the total contribution limits are the same.) A Roth IRA by definition is a retirement account in which the earnings grow tax-free as long as the money is held in the Roth IRA for at least five years.

After-Tax Contribution

In cliff vesting, employees receive full benefits from their retirement plan account at a certain date, versus becoming vested gradually over time.

Cliff vesting is the process by which employees earn the right to receive full benefits from their company’s qualified retirement plan account at a specified date, rather than becoming vested gradually over a period of time. While it offers the advantage of cashing out quickly, cliff vesting can be more risky for employees if they leave a company ahead of the vesting date, or if the company is a startup that fails before the vesting date. Cliff vesting is the process by which employees earn the right to receive full benefits from their company’s qualified retirement plan account at a specified date, rather than becoming vested gradually over a period of time. GE, Jane’s employer, is required to communicate the vesting schedule to employees and report the qualified retirement plan balance to each worker. If GE set up a four-year vesting schedule, Jane would be vested in 25% of the company’s $5,000 contributions at the end of year one.

Cliff Vesting

The CSRS provided the retirement, disability, and survivor benefits for most U.S. civilian service employees working for the federal government.

The Civil Service Retirement System is a system that provided retirement, disability, and survivor benefits for most U.S. civilian service employees working for the federal government. If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later.
2.  **Early**: The early retirement benefit is available in certain involuntary separation cases and in cases of voluntary separations during a major reorganization or reduction in force.
3.  **Deferred**: If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or older. The Basic Benefit and Social Security parts of FERS require you to pay your share each pay period. Your agency must certify that it is unable to accommodate your disabling medical condition in your present position and that it has considered you for any vacant position in the same agency at the same grade/pay level, within the same commuting area, for which you are qualified for reassignment.

Civil Service Retirement System (CSRS)

Retirement and health benefit accounts typically include a custodial agreement to allow a professional third party to administer a plan.

A custodial agreement is an arrangement wherein one holds an asset or property on behalf of the actual owner (beneficial owner). With custodial agreements used for benefits programs, the custodian collects employee funds through regular payroll deductions and invests the money; any fees connected to these agreements are typically lower than the ones that would be charged to individual investors. If the account owner were to die, the custodian could be responsible for liquidating the funds in the account and then see to the distribution of the assets to the beneficiaries in accordance with the parameters of the decedent’s estate. Examples include employee benefit programs such as 401(k) plans or health savings accounts in which a company hires a third party to administer the plan. For example, if an employee with a health savings account receives a distribution, the employee may hold the responsibility for substantiating that this went towards what is deemed a qualified medical expense.

Custodial Agreement

Deferred compensation is when part of an employee's pay is held for disbursement at a later time, usually providing a tax deferred benefit to the employee.

Deferred compensation is a portion of an employee's compensation that is set aside to be paid at a later date. Qualified deferred compensation plans are pension plans governed by the Employee Retirement Income Security Act (ERISA), including 401(k) plans and 403(b) plans. There are two broad categories of deferred compensation: qualified deferred compensation and non-qualified deferred compensation. At the time of the deferral, the employee pays Social Security and Medicare taxes on the deferred income just as on the rest of his or her income but does not have to pay income tax on the deferred compensation until the funds are actually received. Forms of deferred compensation include retirement plans, pension plans, and stock-option plans.

Deferred Compensation

An employee savings plan (ESP) is an employer-provided tax-deferred account typically used to save for retirement, such as a defined contribution plan.

Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits

An employee savings plan (ESP) is a pooled investment account provided by an employer that allows employees to set aside a portion of their pre-tax wages for retirement savings or other long-term goals, such as paying for college tuition or purchasing a home. In addition to or in place of DC plans, some employers offer profit-sharing plans in which the employer makes an annual or quarterly lump sum contribution into a tax-deferred account that could be a 401(k).
Non-qualified deferred compensation plans, though less common, are another way for highly compensated employees to save for retirement or other financial goals. ESPs mostly support saving for retirement and come in two main forms: defined-contribution plans or DC plans offered by corporations (known as 401(k) plans), and those offered by public or non-profit entities (known as 403(b) or 457(b) plans). An employee savings plan (ESP) is a pooled investment account provided by an employer that allows employees to set aside a portion of their pre-tax wages for retirement savings or other long-term goals, such as paying for college tuition or purchasing a home. 401(k) retirement plans allow employees to save up to $19,500 a year for retirement, sometimes with additional contributions made by an employer match.

Employee Savings Plan (ESP)

The Employee Retirement Income Security Act (ERISA) protects workers' retirement savings by ensuring fiduciaries do not misuse plan assets.

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act (ERISA) of 1974 protects the retirement assets of workers in the U.S. by implementing rules that qualified plans must follow to ensure that plan fiduciaries do not misuse plan assets. The Employee Retirement Income Security Act (ERISA) of 1974 protects the retirement assets of workers in the U.S. by implementing rules that qualified plans must follow to ensure that plan fiduciaries do not misuse plan assets. The Employee Retirement Income Security Act (ERISA) implements rules and regulations preventing retirement plan fiduciaries from misusing plan assets. To ensure that participants do not lose their retirement contributions if a defined-benefit pension plan is terminated, ERISA guarantees payment of certain benefits through a federally chartered corporation known as the Pension Benefit Guaranty Corporation (PBGC). Employers must follow ERISA rules that dictate which employees are eligible and how a company handles employee contributions, and they are required to clearly spell out details of the plan's features within a summary plan description.

The Federal Employee Retirement System (FERS) is the primary retirement plan for U.S. federal civilian employees.

Public Pensions in Flux: Can the Federal Government’s Experiences Inform State Responses?

Federal Employees’ Retirement System: Budget and Trust Fund Issues

The Federal Employee Retirement System (FERS), is a system that became effective in 1987 and replaced the Civil Service Retirement System (CSRS) as the primary retirement plan for U.S. federal civilian employees. The system has four categories of benefits when they paid out:
1.  **Immediate**: If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later. 2.  Through a basic benefit plan for which the employee is charged a nominal amount
3.  Through a Thrift Savings Plan (TSP), which comprises automatic government contributions, voluntary employee contributions, and matching government contributions The Federal Employee Retirement System (FERS), is a system that became effective in 1987 and replaced the Civil Service Retirement System (CSRS) as the primary retirement plan for U.S. federal civilian employees. If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or older.

Federal Employee Retirement System (FERS)

Form 8891 was an IRS form completed by U.S. citizens or residents who participated in registered Canadian retirement savings plans or income funds.

IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements

Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans was an Internal Revenue Service (IRS) form completed by U.S. citizens or residents who participated in registered Canadian retirement savings plans or income funds. Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans was an Internal Revenue Service (IRS) form completed by U.S. citizens or residents who participated in registered Canadian retirement savings plans or income funds. Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans applied primarily to registered retirement savings plans (RRSPs) or registered retirement income funds (RRIFs). Form 8891 was filed by U.S. citizens or residents who participated in Canadian registered retirement savings plans or registered retirement income funds. Form 8891 was used to report any contributions made and distributions received from these plans, along with earnings accrued within the plan (even if they weren't distributed.)
Form 8891 was filed by any U.S. citizen or resident who contributed to and/or received benefits from an RRSP or RRIF.

Form 8891

A to-fund is a type of target-date retirement fund whose asset allocation becomes most conservative at the fund's target date. 

Target-Date Funds Are Performing Well. But Choosing One Can Be Harder Than You Think.

A to-fund is a type of target-date retirement fund whose asset allocation becomes most conservative at the fund’s target date. A “to” target-date 2045 fund might have a glide path that results in an asset allocation of 0% stocks and 100% bonds and short-term funds in 2045, whereas a “through” 2045 target-date fund might still be invested 60% in stocks with the remaining 40% in bonds and short-term funds. A to-fund is a type of target-date retirement fund whose asset allocation becomes most conservative at the fund’s target date. A to-fund is a type of target-date retirement fund whose asset allocation becomes most conservative at the fund’s target date. A to-fund might make sense for someone who expects to cash out their investment when the fund reaches the target date in order to purchase a different type of asset or investment.

To-Fund

A highly compensated employee (HCE) is anyone who owns at least 5% of shares in a company and earns more than the federal predetermined compensation limit.

2021 Limitations Adjusted as Provided in Section 415(d), etc

From Title 26 - Internal Revenue Code, Subtitle A, Chapter 1, Subchapter D, Part I: Pension, Profit-Sharing, Stock Bonus Plans, etc. Subpart B-Special Rules

401(k) Plan Fix-It Guide - The Plan Failed the 401(k) ADP and ACP Nondiscrimination Tests

Tax Consequences of Plan Disqualification

A highly compensated employee (HCE) is, according to the Internal Revenue Service, anyone who has done one of the following:
Owned more than 5% of the interest in a business at any time during the year or the preceding year, regardless of how much compensation that person earned or received
Received compensation from the business of more than $130,000 if the preceding year is 2020 or 2021, and, if the employer so chooses, was in the top 20% of employees when ranked by compensation
A highly compensated employee is defined as an employee that owns more than 5% of the interest in a business at any time during the year or the preceding year.
By examining the contributions made by HCEs, the federal government compliance test determines whether all employees are treated equally through the company’s 401(k) plan.
How much an HCE can contribute to their own retirement plans depends on the level of non-HCEs participation in the plan. A highly compensated employee (HCE) is, according to the Internal Revenue Service, anyone who has done one of the following:
Owned more than 5% of the interest in a business at any time during the year or the preceding year, regardless of how much compensation that person earned or received
Received compensation from the business of more than $130,000 if the preceding year is 2020 or 2021, and, if the employer so chooses, was in the top 20% of employees when ranked by compensation
A highly compensated employee is defined as an employee that owns more than 5% of the interest in a business at any time during the year or the preceding year.
By examining the contributions made by HCEs, the federal government compliance test determines whether all employees are treated equally through the company’s 401(k) plan.
How much an HCE can contribute to their own retirement plans depends on the level of non-HCEs participation in the plan. In simpler terms, when a company contributes to a defined-benefit or defined-contribution plan for its employees and those contributions are based on the employee's compensation, the IRS requires that the company minimize the discrepancy between the retirement benefits received by highly compensated and lower compensated employees. The interest owned by an individual also includes the interest attributed to his or her relatives such as spouse, parents, children, grandchildren, but not grandparents or siblings.﻿﻿ An employee with exactly 5% ownership in the company is not considered a highly compensated employee, whereas one with a 5.01% interest in the company has the HCE status. If the average contributions of HCEs to the plan are more than 2% higher than the average contributions of non-HCEs, the plan would fail the non-discrimination test.

Highly Compensated Employee (HCE)

The Home Buyers' Plan is a Canadian program allowing individuals to loan themselves retirement funds tax-free to build or purchase their first home.

The Home Buyers’ Plan (HBP) is a Canadian program that allows individuals with registered retirement savings plans (RRSPs) to use up to CAD $35,000 of retirement plan holdings as a loan for a home purchase. Funds borrowed from the retirement plan must be repaid over a seventeen-year period (with no mandatory repayments for the first two years of the loan).
The Home Buyers’ Plan is open to first-time homebuyers with a written agreement to buy or build a qualifying home for themselves. In addition to the HBP, Canada offers citizens the opportunity to withdraw tax-free funds from RRSPs to pay for educational expenses via the Lifelong Learning Plan (LLP).
These benefits extend to payments for training or educational expenses for an individual or for a spouse or common-law partner. The Home Buyers’ Plan (HBP) is a Canadian program that allows individuals with registered retirement savings plans (RRSPs) to use up to CAD $35,000 of retirement plan holdings as a loan for a home purchase. Canada defines first-time home buyers as those who have not owned and occupied a home over a four-year period beginning on Jan. 1 of the fourth year prior to the withdrawal.

Home Buyers' Plan (HBP)

A life expectancy method calculates IRA payments by dividing the balance of a retirement account by the policyholder’s anticipated length of life.

IRS: Seniors, retirees not required to take distributions from retirement accounts this year under new law

Table of Contents
What Is the Life Expectancy Method? How Life Expectancy Method Works
Types of Life Expectancy Methods
Example of Life Expectancy Method
The life expectancy method is a way of calculating individual retirement account (IRA) distribution payments by dividing the balance or total value of a retirement account by the policyholder’s anticipated length of life. The life expectancy method is the most straightforward method of calculating required minimum distributions (RMDs) for retirement accounts by the Internal Revenue Service (IRS).
RMDs are required distributions that must be withdrawn from certain retirement accounts once the owner reaches age 72. The life expectancy method takes into account your actuarial life expectancy and the starting account balance. To offset the risk of outliving annuity payments, some choose the recalculation method, which differs from the term-certain method by recalculating your life expectancy every year.

Life Expectancy Method

A Locked-In Retirement Account (LIRA) is a Canadian registered retirement savings account that does not permit early cash withdrawals.

Pension funds that are transferred to a LIRA can be used to purchase a life annuity or can be transferred to a life income fund (LIF) or a locked-in retirement income fund (LRIF).
Once the fund's beneficiary reaches retirement age, the life annuity, LIF, or LRIF provide a pension for life. Various allowable reasons for unlocking a LIRA include low Income, potential foreclosure, eviction from a rental, first month’s rent and security deposit, high medical or disability costs, shortened life expectancy, and permanent departure from Canada.
Unlocking 50% of a LIRA can be done one time if you are 55 years old or older in some provinces and federally. Small balance unlocking is allowed if the balance is under a certain amount.
It's best to consult a financial advisor if the amounts involved are substantial. Pension funds within a LIRA can be transferred to another retirement fund or used to purchase a life annuity.
Locked-In Retirement Accounts are governed by federal or provincial pension legislation. A Locked-in Retirement Account (LIRA) is a type of registered pension fund in Canada that does not permit withdrawals before retirement except in exceptional circumstances.

Locked-In Retirement Account (LIRA)

A long-term incentive plan (LTIP) is a company policy that rewards employees for fulfilling conditions or requirements that lead to increased shareholder value.

A long-term incentive plan (LTIP) is a company policy that rewards employees for reaching specific goals that lead to increased shareholder value. When objectives in a company's growth plan match those of the company's LTIP, key employees know which performance factors to focus on for improving the business and earning more personal compensation. A long-term incentive plan (LTIP) is a company policy that rewards employees for reaching specific goals that lead to increased shareholder value. A long-term incentive plan (LTIP), while geared toward employees, is really a function of the business itself striving for long-term growth. When a business matches a percentage of an employee's paycheck going into the plan, employees are more likely to work for the company until retirement.

Long-Term Incentive Plan (LTIP)

A matured RRSP is a government-sponsored Canadian registered retirement savings plan used to produce retirement income for the plan participant. 

Are RRSPs still the way to go? Many Canadians aren't sure and don't seek advice: CIBC poll

A matured registered retirement savings plan (matured RRSP) is a Canadian retirement savings plan that is registered with the Canadian government, and which has entered the phase of being used to produce retirement income for the beneficiary. At that time, a matured RRSP can be converted into any mature option or a combination of the following:
1.  Shift some or all RRSP assets into an RRIF and start to receive minimum annual payments from the RRIF account.
2.  Use part or all of the RRSP account to buy an annuity and begin to receive taxable payments.
3.  Cash in part or all of the RRSP account, document the withdrawal on that year’s income tax return, and pay the resulting income tax. A Registered Retirement Savings Plan (RRSP) is a defined-contribution retirement savings and investing vehicle for employees and the self-employed in Canada, similar to 401(k) plans in the U.S.
A matured registered retirement savings plan (RRSP) is a Canadian retirement plan that is no longer in the accumulation phase (i.e., it has matured). A matured registered retirement savings plan (matured RRSP) is a Canadian retirement savings plan that is registered with the Canadian government, and which has entered the phase of being used to produce retirement income for the beneficiary. A matured RRSP is similar to a registered retirement income fund (RRIF) in that they both pay retirement income to the beneficiary.

Matured RRSP

A nonqualified plan is a tax-deferred, employer-sponsored retirement plan that falls outside of Employee Retirement Income Security Act guidelines.

Table of Contents
What Is a Nonqualified Plan? There are four major types of nonqualified plans:
Deferred-compensation plans
Executive bonus plans
Split-dollar life insurance plans
Group carve-out plans
The contributions made to these types of plans are usually nondeductible to the employer and taxable to the employee.
However, they allow employees to defer taxes until retirement (when they presumably will be in a lower tax bracket). There are two types of deferred compensation plans: true deferred compensation plans and salary-continuation plans. A group carve-out plan is another life insurance arrangement in which the employer carves out a key employee’s group life insurance over $50,000 and replaces it with an individual policy. One of the other major goals of a nonqualified plan is to allow highly compensated employees to contribute to another retirement plan after their qualified retirement plan contributions have been maxed out, which usually happens quickly given their level of compensation.

Nonqualified Plan

A pre-tax contribution is any contribution made to a designated pension plan, retirement account, or other tax deferred investment vehicle for which the contribution is made before federal and/or municipal taxes are deducted.

A pretax contribution is any contribution made to a designated pension plan, retirement account, or another tax-deferred investment vehicle for which the contribution is made before federal and municipal taxes are deducted. In addition, because pre-tax contributions reduce the amount of taxable income and, thus, income tax an employee owes each year, an employee can afford to contribute more pre tax than after tax. If the contribution is made with money for which an individual has already paid tax, it is referred to as an after-tax contribution.
After-tax contributions can be made instead of or in addition to pre-tax contributions. While taxes are paid on withdrawals from pre-tax contribution plans, tax is paid on Roth contributions now, but their earnings can be withdrawn tax-free. An individual who is torn between making pretax or Roth contributions to their retirement plan should compare their current tax bracket with their expected tax bracket at retirement.

Pretax Contribution

A profit-sharing plan, also known as a deferred profit-sharing plan (DPSP), gives employees a share in the profits of a company.

A profit-sharing plan is a retirement plan that gives employees a share in the profits of a company. If the business owner shares 10% of the annual profits and the business earns $100,000 in a fiscal year, the company would allocate profit share as follows:
Employee A = ($100,000 X 0.10) X ($50,000 / $150,000), or $3,333.33
Employee B = ($100,000 X 0.10) X ($100,000 / $150,000), or $6,666.67
The contribution limit for a company sharing profits with an employee for 2021 and $64,500 including catch-up contributions for those 50 or over during the year. The most frequently used formula for a company to determine a profit-sharing allocation is called the “comp-to-comp method.”
Let’s assume a business with only two employees uses a comp-to-comp method for profit sharing. Under this type of plan, also known as a deferred profit-sharing plan (DPSP), an employee receives a percentage of a company’s profits based on its quarterly or annual earnings. A profit-sharing plan is a retirement plan that gives employees a share in the profits of a company.

Profit-Sharing Plan

Provident funds are retirement savings plans into which employees contribute portions of their salary, similar to U.S. Social Security.

A provident fund is a compulsory, government-managed retirement savings scheme used in Singapore, India, and other developing countries. A provident fund is managed by the government, with set minimum and maximum contribution levels.
The money held in private savings accounts continues to grow in many developing countries, but it's still rarely enough to provide most families with a comfortable life in retirement. A provident fund is a compulsory, government-managed retirement savings scheme used in Singapore, India, and other developing countries. A provident fund is a compulsory, government-managed retirement savings scheme used in Singapore, India, and other developing countries. As is the case with U.S. Social Security, the money in provident funds is held by the government, not by private financial institutions.

Provident Fund

A qualified retirement plan meets the requirements of Internal Revenue Code Section 401(a) and is therefore eligible to receive certain tax benefits. 

A qualified retirement plan meets the requirements of Internal Revenue Code Section 401(a) of the Internal Revenue Service (IRS) and is thus eligible to receive certain tax benefits, unlike a non-qualified plan. Retirement plans also specify when distributions can be made, typically when the employee reaches the plan’s defined retirement age, when the employee becomes disabled, when the plan is terminated and not replaced by another qualified plan, or when the employee dies (in which case the beneficiary receives the distributions).
Qualified retirement plans give employers a tax break for the contributions they make for their employees. Other examples of qualified plans include the following:
Profit-sharing plans
403(b) plans
Money purchase plans
Defined benefit plans
Employee stock ownership (ESOP) plans
Salary Reduction Simplified Employee Pension (SARSEP)
Simplified Employee Pension (SEP)
Savings Incentive Match Plan for Employees (SIMPLE) For example, plan rules may require that the loan be repaid within a certain number of years, that the worker pays interest (which goes back into the plan) on the loan, and that the loan is repaid immediately if the employee leaves the job to which the qualified retirement plan is tied. A qualified retirement plan meets the requirements of Internal Revenue Code Section 401(a) of the Internal Revenue Service (IRS) and is thus eligible to receive certain tax benefits, unlike a non-qualified plan.

Qualified Retirement Plan

A retirement contribution is a payment into to a retirement plan, either pretax or after tax.

Social Security Board of Trustees: Combined Trust Funds Projected Depletion One Year Sooner Than Last Year

67 percent of private industry workers had access to retirement plans in 2020

WHAT HAPPENED TO PRIVATE SECTOR PENSIONS?

A retirement contribution is a monetary contribution to a retirement plan. For example, a 401(k) plan might allow an employee to contribute a percentage of their salary, while the employer might offer to match contributions up to 5% (of the employee's salary).
Those who can contribute at least 10% of their income (or more if possible) during their working lives and invest the money in a broad range of securities (for diversification purposes) have a good chance of creating a sizable retirement fund.
On the other hand, those who don't contribute to a retirement plan or invest too conservatively in their early years (e.g., money markets and low-interest bonds) might find themselves not having enough money during retirement. An individual who is torn between making pretax or Roth contributions to their retirement plan should compare their current tax bracket with their expected tax bracket at retirement. In other words, you don't receive a tax deduction in the year of the contribution, but the investment earnings grow tax-free, and the withdrawals, in retirement, are also tax-free. Qualified retirement contributions have tax benefits, depending on how much the contribution is about the contributor's income and whether the contributor has made previous contributions that would limit tax deductibility.

Retirement Contribution

A Retirement Income Fund (RIF) is an investment product aimed at paying out a stated yield for those seeking retirement income.

A Retirement Income Fund (RIF) is an investment product available to anyone as a conservative means of saving for retirement. Retirement income funds are actively managed funds that are intended to provide conservative, moderate growth for assets tucked away for retirement purposes, such as individual retirement accounts (IRAs). Money in Vanguard's fund is spread across numerous other Vanguard stock, and bond funds with the mix changed at the discretion of the fund manager. To accomplish this, the fund’s portfolio managers aim to adjust the fund’s overall asset allocation over time with an emphasis on sustaining its monthly payouts, keeping pace with inflation, and preserving capital over the long term. A retirement income fund is designed to produce steady returns and yield higher than conservative investments such as CDs.

Retirement Income Fund (RIF)

A rollover may entail several actions, most popularly the transfer of the holdings of one retirement plan to another without creating a taxable event.

A rollover may entail a number of actions, most popularly the transfer of the holdings of one retirement plan to another without creating a taxable event. In the case of a 60-day rollover, funds from a retirement plan or IRA are paid directly to the investor, who deposits some or all of the funds in another retirement plan or IRA within 60 days. A rollover IRA or IRA rollover is a transfer of funds from a retirement account into a traditional IRA or a Roth IRA. When receiving a distribution from an IRA through a trustee-to-trustee transfer, the institution holding the IRA may distribute the funds from the IRA to the other IRA or a retirement plan. A rollover may also entail reinvesting funds from a mature security into a new issue of the same or similar security, or moving a FOREX (FX) position to the following delivery date, in which case the rollover incurs a charge.

Rollover

A Roth option, available in some company 401(k) retirement plans, permits an employee to contribute after-tax dollars to an account.

IRS provides tax inflation adjustments for tax year 2020

IRS provides tax inflation adjustments for tax year 2021

Table of Contents
What Is a Roth Option?
Understanding a Roth Option
Who Needs a Roth Option? For 2020, tax brackets are as follows:
37% for incomes over $518,400 ($622,050 for married couples filing jointly)
35% for incomes over $207,350 ($414,700 for married couples filing jointly)
32% for incomes over $163,300 ($326,600 for married couples filing jointly)
24% for incomes over $85,525 ($171,050 for married couples filing jointly)
22% for incomes over $40,125 ($80,250 for married couples filing jointly)
12% for incomes over $9,875 ($19,750 for married couples filing jointly)
The lowest rate is 10% for incomes of single individuals with incomes of $9,875 or less ($19,750 for married couples filing jointly).
Given tax rates in 2020, a single taxpayer who believes they might move from the 22% tax bracket down to the 12% tax bracket in retirement would be the most vulnerable since the tax rate differential is 10%. 35% for incomes over $209,425 ($418,850 for married couples filing jointly)
32% for incomes over $164,925 ($329,850 for married couples filing jointly)
24% for incomes over $86,375 ($172,750 for married couples filing jointly)
22% for incomes over $40,525 ($81,050 for married couples filing jointly)
12% for incomes over $9,950 ($19,900 for married couples filing jointly)
The lowest rate is 10% for incomes of single individuals with incomes of $9,950 or less ($19,900 for married couples filing jointly). A Roth option allows an employee to contribute after-tax dollars to a special Roth account that usually reaps all of the advantages that individual Roth IRAs have to offer. A Roth option is an option to invest retirement savings in a special Roth account and is available in some public and private retirement benefit plans.

Roth Option

A Registered Retirement Savings Plan (RRSP) is a retirement savings and investing vehicle for employees and the self-employed in Canada.

Registered Retirement Savings Plan (RRSP).

Deferred and Other Special Income Arrangements.

Employers' Guide – Payroll Deductions and Remittances.

The Pooled Registered Pension Plan (PRPP).

Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs.

MP, DB, RRSP, DPSP, and TFSA limits and the YMPE.

A Registered Retirement Savings Plan (RRSP) is a retirement savings and investing vehicle for employees and the self-employed in Canada. Any sum is included as taxable income in the year of the withdrawal—unless the money is used to buy or build a home or for education (with some conditions).
In the year an RRSP holder turns 71, the RRSP balance must be liquidated or shifted to a Registered Retirement Income Fund (RRIF) or to an annuity.﻿﻿ An RRIF is a retirement fund similar to an annuity contract that pays out income to a beneficiary or a number of beneficiaries.
Money withdrawn from an RRSP through RRIF account payouts They include:
Mutual funds
Exchange-traded funds
Savings accounts
Mortgage loans
Income trusts
Guaranteed investment certificates
Foreign currency
Labor-sponsored funds
The RRSP contribution limit for 2020 is 18% of the earned income an individual has reported on their 2019 tax return, up to a maximum of $27,230, according to the Canada Revenue Agency.﻿﻿ It is possible to contribute more, but additional sums over $2,000 will be hit with penalties. Pre-tax money is placed into an RRSP and grows tax-free until withdrawal, at which time it is taxed at the marginal rate.﻿﻿ Registered Retirement Savings Plans have many features in common with 401(k) plans in the United States, but also some key differences. Unlike with non-RRSP investments, returns are exempt from any capital gains tax, dividend tax, or income tax.

Registered Retirement Savings Plan (RRSP)

Registered Retirement Savings Plan Deduction Limit is the maximum sum Canada allows taxpayers to deduct from their income when calculating tax liability.

The registered retirement savings plan (RRSP) deduction limit is the maximum sum that Canada allows its taxpayers to deduct from their income when calculating tax liability. The sum of contributions made to a taxpayer's personal RRSP and their spouse's or common-law partner's RRSP cannot exceed the RRSP deduction limit or taxes will be imposed on the excess contribution amounts. The registered retirement savings plan (RRSP) deduction limit refers to the most that a Canadian taxpayer can deduct from pre-tax retirement savings on their income taxes. The registered retirement savings plan deduction limit, or RRSP deduction limit, is set by the Canada Revenue Agency (CRA) The registered retirement savings plan (RRSP) deduction limit is the maximum sum that Canada allows its taxpayers to deduct from their income when calculating tax liability.

Registered Retirement Savings Plan Deduction Limit

Rule 72(t), issued by the Internal Revenue Service, allows for penalty-free withdrawals from an IRA account and other specified tax-advantaged accounts.

Rule 72(t) allows penalty-free withdrawals from IRA accounts and other tax-advantaged retirement accounts like 401(k) and 403(b) plans. The amounts an account holder receives in the periodic payments enabled by rule 72(t) depend on life expectancy, which can be calculated through one of three IRS-approved methods:
The amortization method
The minimum distribution (or the life expectancy method)
The annuitization method
The amortization method determines yearly payment amounts by amortizing the balance of an IRA owner’s account over single or joint life expectancy. Rule 72(t) actually refers to code 72(t), section 2, which specifies exceptions to the early-withdrawal tax that allow IRA owners to withdraw funds from their retirement account before age 59½, as long as certain qualifications, known as SEPP regulations, are met.
To take advantage of this rule, the owner of the retirement account must take at least five substantially equal periodic payments (SEPPs). The key difference between this method and the amortization method is the resulting payments with the minimum distribution method, as the name implies, are the lowest possible amounts that can be withdrawn. The final IRS-approved calculation is the annuitization method, which uses an annuity factor method provided by the IRS to determine equivalent or nearly equivalent payments in accordance with the SEPP regulation.

Rule 72(t)

A salary reduction contribution is a contribution made to a retirement savings plan that is generally a percentage of an employee's compensation.

A salary reduction contribution is a contribution that is made to a retirement savings plan, which generally represents a percentage of an employee's compensation. With some plans, salary reduction contributions (also known as elective deferral contributions) may also take the shape of a specific dollar amount contributed to an employer-sponsored retirement savings plan, such as a 401(k), 403(b), or a SIMPLE IRA. Salary reduction contributions are traditionally pre-tax, meaning the contribution amounts reduce the individual's taxable income in the year of the contribution. In some cases, contributions can be made with after-tax dollars as in the case of a Roth 401(k), which doesn't provide a tax deduction upfront but the withdrawals or distributions are tax-free in retirement. Salary reduction contributions that are made with after-tax dollars must be declared in an employee's tax return as income.

Salary Reduction Contribution

The savings rate is the percentage of money taken from personal income and saved.

Table 1.1.10. Percentage Shares of Gross Domestic Product

GAO-01-591sp National Saving: Answers to Key Questions

Social and Economic Effects of the U.S. Food System

Personal Income and Outlays, September 2020

The savings rate is a measurement of the amount of money, expressed as a percentage or ratio, that a person deducts from their disposable personal income to set aside as a nest egg or for retirement. In economic terms, saving is a choice to forego some current consumption in favor of increased future consumption, so the savings rate reflects a person or group's rate of time preference. The savings rate is the ratio of personal savings to disposable personal income and can be calculated for an economy as a whole or at the personal level. The savings rate reflects the rate of time preference for an individual or the average time preference for a group. Higher interest rates can lead to lower overall consumption and higher savings because the substitution effect of being able to consume more in the future outweighs the income effect of maintaining current income received from interest payments for most people.

Savings Rate

A Summary Plan Description is a document that employers must give to employees in retirement plans or health benefit plans covered by ERISA. 

A Summary Plan Description (SPD) is a document that employers must give free to employees who participate in Employee Retirement Income Security Act\-covered retirement plans or health benefit plans. It must include the plan name and its Internal Revenue Service\-assigned number, the employer’s name and address, the plan administrator’s name and contact information, a statement of Health Insurance Portability and Accountability Act rights, ERISA disclosures, and guidance on how employees can file a grievance or an appeal. The plan must answer specific questions such as the plan name, the plan's IRS-assigned number, the employer’s name and address, and a statement of health and accountability rights. A plan should include the answers to the following questions:
Is there a minimum age requirement to participate in the plan?
Is there a minimum service requirement to participate in the plan? It must describe when employees become eligible to participate in the plan, how benefits are calculated and paid, how to claim benefits, and when benefits become vested.

Summary Plan Description

A thrift savings plan (TSP) is a retirement investment program open only to federal employees and members of the uniformed services.

A thrift savings plan (TSP) is a type of retirement investment program open to federal employees and members of the uniformed services, including the Ready Reserve. These options are the Government Securities Investment (G) Fund, the Fixed-Income Index Investment (F) Fund, the Common-Stock Index Investment (C) Fund, the Small-Capitalization Stock Index Investment (S) Fund, the International-Stock Index Investment (I) Fund, as well as specific life-cycle (L) funds designed to include a mix of securities held in each of the individual funds. Employees new to federal employment can roll over 401(k) and individual retirement account (IRA) assets into a TSP and vice versa if they move to the private sector.
A thrift savings plan (TSP) is a defined-contribution retirement plan that has many of the advantages of private-sector plans. TSP benefits can include automatic payroll contributions and agency matching contributions.
Participants can choose to make tax-deferred contributions into a traditional TSP, which means the money that flows into the account will not be taxed until it is withdrawn. The F, S, C, and I funds in the TSP are index funds currently managed by the BlackRock Institutional Trust Company under contract by the Federal Retirement Thrift Investment Board (FRTIB).

Thrift Savings Plan (TSP)

The Unemployment Compensation Amendments of 1992 allow a terminated employee to roll over employer-sponsored retirement savings to another account.

H.R.5260—Unemployment Compensation Amendments of 1992: Summary

H.R.5260—Unemployment Compensation Amendments of 1992

Rollovers of Retirement Plan and IRA Distributions

Understanding Retirement Plan Fees and Expenses

The Unemployment Compensation Amendments of 1992 are a law in the United States that allows an employee who loses their job to roll over their employer-sponsored retirement savings into a qualified retirement plan, such as an individual retirement account (IRA), without tax consequences. The Unemployment Compensation Amendments of 1992 are a law that allows an employee who loses their job to roll over their employer-sponsored retirement savings into an individual retirement account (IRA), or other qualified retirement plan, without tax consequences. Under the Unemployment Compensation Amendments of 1992, if you lose your job, then your employer is required to provide you with the option of rolling over your retirement savings in a company-sponsored plan, such as a 401(k), to an IRA or other qualified retirement plan account that you choose. In a trustee-to-trustee transfer, also called a direct transfer, the funds are not paid directly to the account holder, nor does the account holder receive a check made payable to the new account.

Retirement Savings Accounts

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