Qualified Retirement Plan

Qualified Retirement PlanYou work and work and work for your whole life in hopes that one-day you’ll be able to retire and enjoy the golden years of life. You can’t rely on Social Security to provide you with a trust fund once you reach the age for retirement, so you continue to work to attempt and build up a savings for you and your family. If you have the pleasure of working for a company that offers its employees a qualified retirement plan, that dream is becoming a reality even though it may seem like a distant dream. By offering these plans, companies can attract and retain employees that strive to work and stay with the company for a very long time. You are the one in control of your retirement and the first person you should do it for is yourself.

It is important to understand exactly what a Qualified Retirement Plan is before we can begin discussing the benefits they hold. Qualified Retirement Plans is a plan that is established by an employer for the benefit of the company’s employees. These plans give employers a tax break for the contributions they make for their employees. If the plan allows employees to defer a portion of their salaries into a plan, it also reduces the employees’ present income-tax liability by reducing their taxable income. In some cases, the employer will match the employee’s contributions to the retirement plan. Contributions are made in the accounts, in which the accounts earn income and begin to grow, and, hopefully, the assets in the account appreciate. Thus, when it is time for the employee to retire, he or she may begin receiving a payout from the account.

Qualified plans may allow investments, but only certain types, which vary from plan to plan, but these typically include publicly traded securities, real estate, mutual funds, and money market funds. These qualified plans also define when distributions from the plan may be made. Typically, these distributions are made when the employee reaches the retirement age defined by the plan, when the employee becomes disabled or unable to continue work, when the plan is terminated and not replaced by another qualified plan, or if the employee dies, in which case the beneficiaries receive the distributions.

It is important to note that workers may take distributions from qualified retirement plans before the retirement age is reached or one of the triggering events occurs. If a distribution is made from the plan, the employee may be subject to taxes and penalties that might make it unwise to take an early distribution. Some plans allow employees to borrow from the plan, but they also hold strict rules regarding the repayment of the loan.

This is just another way that you can plan for your future, and, in a way, reward yourself for your life of hard work. That isn’t to say that a Qualified Retirement Plan isn’t a way to help your family continue after a tragic incident. By making these preparations now, you can ensure that you and your family will be taken care of after your days of working are over.


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About Bob Cantlay

I have been working for the Southern Medical Association since 2004 and hold Bachelor of Science degrees in both Business Administration & Computer Science, as well as a Masters of Management. Outside of work, my wife and two kids are the center of activity; but occasionally I get away long enough to play Ultimate (Frisbee Football). I also have a newfound interest in kayaking.

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