Retirement Plans-10 Flashcards
The employee retirement income security act of 1974
Was enacted to provide minimum benefit standards for pension and employee benefits plans
Defined benefit plans
Pay a specified benefit amount upon the employees retirement
Defined contribution plans
Do not specify the exact benefit amount until distribution begins
Profit sharing plans
Plan that sets aside a portion of the firms net income for distributions to employees who qualify under the plan
Pension plans
Based on the employees compensation and years of service, not company profitability or performance
Money purchase plans
Allow employers to contribute a fixed annual amount apportioned to each participant with benefits based on funds in the account upon retirement
Stock bonus plans
Similar to a profit sharing plan except that contributions by the employer do not depend on profits
401k plans
Allows employers to make tax deferred contributions to the participant
Tax sheltered annuity (403(b) plans
Are a special class of retirement plans available to employees of certain charitable, educational, or religious organizations
Simplified employee plans
Arrangement where an employee establishes and maintains an IRA to which the employer contributes
Savings incentive match plan for employees (SIMPLE)
Available to small businesses that employ no more than 100 employees who received at least $5000 in compensation from employer in previous year
Keogh plans
For self employed persons
May be defined contribution or defined benefit plans
Traditional IRAs
Allow for an individual to contribute a limited amount of money per year
Roth IRAs
Designed so that withdrawals are received income tax-free
Rollovers
Are a transfer of funds from one IRA or qualified plan to another
