Employer - Sponsored Retirement Plans
An employer-sponsored retirement plan is a defined contribution and tax – favored retirement plan which is partially or fully funded by the sponsoring employer. The employer’s contributions, and those of the employees (it they too contribute to the plan), are commonly deductible from their respective incomes. There are two types of employer-sponsored retirement plans: basic and supplemental. Basic plans call for automatic employee participation after a certain term of employment, such as one year. The supplemental plan is a voluntary program that enables employees to increase the amount of money being set aside for their retirements. Some examples of basic plans include: employer pension plans, defined benefits plans, defined contribution plans. Some examples of supplemental plans are: profit-sharing, thrift and savings, and salary reduction plans.