What are Profit-Sharing Plans? A profit-sharing plan is a type of retirement savings account that allows employers to share their profits with their employees. It is a way for companies to reward their employees for their hard work and contributions to the company’s success. Under a profit-sharing plan, employers contribute … …
Types of Retirement Savings Accounts 1. 401(k) Plans A 401(k) plan is a type of employer-sponsored retirement savings account. It allows employees to contribute a portion of their salary to the account on a pre-tax basis. The contributions are invested in a variety of investment options, such as mutual funds … …
What is Deferred Compensation? Deferred compensation refers to a type of employee benefit plan that allows employees to defer a portion of their income until a later date, typically retirement. It is a way for employees to save and invest money for their future, while also providing tax advantages. When … …
What is a Retirement Savings Account? A retirement savings account is a type of investment account that is specifically designed to help individuals save money for their retirement. It is a long-term savings vehicle that allows individuals to contribute funds on a regular basis, with the goal of accumulating a … …
Qualified Retirement Plan Definition A qualified retirement plan is a type of retirement savings account that is established by an employer for the benefit of their employees. These plans are designed to provide employees with a way to save for retirement and receive certain tax advantages. There are two main … …
Non-Qualified Plan: Definition, How It Works, and 4 Major Types A non-qualified plan is a type of retirement savings account that does not meet the requirements set by the Internal Revenue Service (IRS) to qualify for special tax treatment. Unlike qualified plans, such as 401(k) or IRA accounts, non-qualified plans … …
What is a Long-Term Incentive Plan? A long-term incentive plan (LTIP) is a compensation program designed to reward employees for achieving specific long-term goals and objectives. Unlike short-term incentive plans, which focus on immediate performance targets, LTIPs are designed to motivate and retain employees over an extended period of time. … …
What is a Locked-in Retirement Account (LIRA)? A Locked-in Retirement Account (LIRA) is a type of retirement savings account that is designed to hold funds that have been transferred from a registered pension plan (RPP) or a deferred profit sharing plan (DPSP). The funds in a LIRA are “locked-in,” meaning … …
What is the Home Buyers Plan (HBP)? The Home Buyers Plan (HBP) is a program offered by the Canadian government that allows individuals to withdraw funds from their registered retirement savings plans (RRSPs) to purchase or build a qualifying home. This program is specifically designed to assist first-time homebuyers in … …
Criteria for HCE Classification Highly Compensated Employee (HCE) classification is determined based on certain criteria that an individual must meet. These criteria are set by the Internal Revenue Service (IRS) and are used to identify employees who earn a high level of income and may have different retirement savings options. … …
Retirement Plan Contribution Limits The contribution limits vary depending on the type of retirement plan you have. Some common types of retirement plans include 401(k)s, IRAs, and Roth IRAs. Each of these plans has its own set of contribution limits, which are outlined by the IRS. For 2021, the contribution … …
Employee Retirement Income Security Act (ERISA) History The Employee Retirement Income Security Act (ERISA) was enacted in 1974 in the United States. It was signed into law by President Gerald Ford in response to concerns about the security of employee retirement benefits. Prior to the passage of ERISA, there was … …
What are After-Tax Contributions? After-tax contributions refer to the money that individuals contribute to their retirement savings accounts after they have already paid taxes on it. Unlike pre-tax contributions, which are made with pre-tax dollars and reduce taxable income, after-tax contributions are made with post-tax dollars and do not provide … …