Qualified Retirement Plans
- Retirement plans eligible for tax benefits.
- Set by employers to help employees make money.
- Employers receive tax breaks for contributions they make for employees.
- Employees can contribute using part of their salaries (which lowers their taxable income).
- Two types: Defined benefit and defined contribution.
- Defined benefit - Funded and managed by the company. Employees are guaranteed payout at a later date. Examples: Pensions
- Defined contribution - employees pay and contribute and bear the risks. Example: 401k.
- Early withdrawals are usually subjected to fees (unless disabled, or a special condition is met).