Qualified Plan Funding : Beaini Financial Solutions

Qualified Plan Funding

Qualified retirement plans usually cover significantly all eligible employees and have special tax advantages. Such plans are subject to strict and somewhat complex rules in order to obtain tax advantages.

There are two broad categories of qualified retirement plans:

Defined Benefit Plan provides employees with a fixed and known benefit at retirement; the amount is usually defined by length of service and highest attained salary.

Defined Contribution Retirement Plan provides employees with a retirement benefit based on the value of the employee’s account at retirement. There are specific Defined Contribution Retirement Plans available including a 401(k) Plan, 403(b) and a Profit Sharing Plan. Variations of an IRA-based Defined Contribution Plan include Simplified Employee Pension Plan (SEP) and Savings Incentive Match Plan for Employees (SIMPLE). Both the SIMPLE and SEP plans bring the benefits of employer-sponsored retirement programs to the employees of small business.