Among the variety of retirement plans you can pursue, some qualify for tax deferral by the regulations of the federal government, and others don’t. The federal government passed the Employee Retirement Income Security Act (ERISA) regulation in 1974. This legislation and its requirements determine whether a retirement plan offered by employers or an employee organization (such as a union) qualifies for tax deferral of investment and interest until retirement age. (more…)

If you are an employee and your employer has established a 401k plan, it is a mistake to not participate and not contribute as much as possible. When you put your money investing in a 401k, you wish to get your money’s deserving for your investment. Your main goal is by the time your retirement come so that you can retire comfortably. (more…)

The maximum 401k contribution per year to a 401(k) plan in 1998 is not to exceed 25% of compensation. Although there is no legal minimum contribution requirement, in order to reduce the plan’s administrative costs, some plans establish a minimum amount that must be contributed.

There is also a limit on total 401 k contributions that employee and employer together can (more…)

Retirement plans come in all shapes and sizes, but most plans fall into a few broad types. The following is a list of the major categories. I discuss the individual plans in detail later in the book.

Defined Benefit Plans

A defined benefit plan is a retirement arrangement in which your employer guarantees the benefit. (more…)

A 401k plan is a retirement account set up by an employer into which employee put aside some of his/her salary into the account. It is named defined contribution plan because the annual amount of money that can be given to each employee account is defined. This 401k plan program does not assure a defined retirement benefit when employees withdraw their money when it is mature. (more…)

Analyses of retirement income adequacy and retirement income planning often focus on people age 65 and over because the overwhelming majority of workers have retired by this age. Thus it is possible to look at the sources and level of income available to people over 65 to get some sense of the standards of living that are achievable in retirement.

An elderly unit is a family in which at least one person is 65 years of age or older. 44 percent of the elderly units were receiving some pension income. (more…)

If you are counting on your 401k plan for retirement - beware! The current financial crisis and stock market collapse are troubling enough, but what many retirement savers don’t know is that their 401k plans may not be up to the task.

401k’s have become the predominant retirement funding tool in the U.S. Twenty-five years ago, traditional defined benefit pensions plans were the primary type of retirement plan covering more than 60% of the workforce that had pension plan coverage. Today, defined contribution plans (mostly 401k) are the primary retirement plan for 63% of the covered workforce. (more…)

401k retirement plans are one example of employee retirement plans that are sponsored by an employer. These employee retirement plans are a way for employees to be able to save and plan for their retirement.

401k retirement plans typically involve automatically taking a percentage of the employee’s paycheck and depositing it into the employee retirement plans. (more…)

Employees of small businesses often end up left out of employer-sponsored retirement plans simply because small businesses do not have the funds available to provide this type of benefit for their employees or small business owners do not know the different retirement plan options available to them. However, small businesses owners can create simple retirement plans to assist employees in their retirement planning. Below is an outline of two different simple approaches for retirement plan comparison. (more…)

You are eligible for your employer’s pension plan if you have worked there for one year and at least 1000 hours. Employers offer two basic types of retirement accounts—defined contribution plans or defined benefit plans.

Defined contribution plans are characterized by an annual contribution being made for each employee. (more…)