Quick Definition

A qualified retirement plan is a type of retirement savings plan that offers tax advantages and is established by an employer for the benefit of its employees.

Examples

• 1A company sets up a 401(k) plan allowing employees to contribute a portion of their salary on a pre-tax basis.
• 2A small business owner establishes a SEP IRA to provide retirement benefits for themselves and their employees, allowing for higher contribution limits.
• 3A non-profit organization offers a 403(b) plan to its employees, which is similar to a 401(k) but specifically for tax-exempt groups.
• 4A school district provides a 457 plan, which allows employees to defer compensation and enjoy tax-deferred growth on earnings until withdrawal.

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