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Qualified retirement plans are “qualified” because of the tax treatment that they receive under the Internal Revenue Code. Normally the qualified retirement plans are set up by employers as part of the employee benefit packet. To be on the lists of qualified retirement plans, the plan as to meet requirements set by the Internal Revenue Code When meeting these requirements the employer or self-employed individual is allowed to deduct the contributions to the plans Employees may be allowed to make additional contributions — pre-tax — and the employees are not immediately taxed on the contributions made.

A qualified retirement plan is one that meets the requirements of section 401(a) Internal Revenue Code and the Employee Retirement Income Security Act of 1974. The plans provide favorable tax treatment but the tax treatment is different for each one. Here are the three lists of qualified retirement plans. One list is a broad category encompassing more of the category. Here is the category of qualified retirement plans.

Defined benefit plan

Defined contribution plan

Hybrid plan

The “defined benefit plan” is simply the plan that is NOT a defined contribution plans promising a fixed or at least a determinable monthly payment at the time that the employee retires. Then compared to the “defined contribution plan” it does not generate a fixed level of benefits when the employee retires. Contributions are made by the employee but at the time of retirement the amount that the employee will receive is adjusted to the expenses or losses that the account has had. Consequently the employee has no way of determining an exact amount that he or she will receive at the time of retirement. The “hybrid plan” combines the features of the defined benefit and the defined contribution plans.

The second of the lists of qualified retirement plans covers the types of qualified retirement plans.

Annuity Plans

Money Purchase Plans

Pension Plans

Profit-sharing plans

“Annuity Plans” are distinguished by various things. Some of the annuity plans are the retirement annuity plan; the tax-sheltered annuity plan, self-directed annuity plan; immediate income annuity; single premium annuity plan, and many others. “Money Purchase Plans” has been referred simply to a pension plan. A fixed percentage of compensation is to be contributed to each of the eligible employees which the company or business has, annually. The “pension plan” is a steady income that is given to an employee at the time of retirement in the form of a guaranteed annuity. “Profit-sharing plans” are retirement plans where the employer is the only one contributing between 0% and 25% of participants who are eligible to participate in the plan. There is usually a maximum amount for each year.

The third of the lists of qualified retirement plans covers specific qualified retirement plan identified by the benefits received.

Government or 457 plans

Keogh plans

SIMPLE plans

Tax-shelter plans

401(k) plans

Each of these plans has various definitions of tax advantages. They may be defined contribution or defined benefit or particularly for the self employed.

Is your employer offering disability retirement plans? If yes, then you’re lucky. In general, employers are not required to offer the said plan. The nice thing about disability plans is the benefits it will give to the employees who become disabled while in service. It’s really good if your employer is open about having disability retirement plans for you and your colleagues. You will never know what will happen to your physical health. There are lots of uncertainties in the workplace. What if you meet an accident while working? Your bright future will be doomed. Can you imagine yourself disabled and financially unstable? Although, service retirement plans are the common benefit plan offered to employees but it has certain requirements in order to avail the benefits.

Service retirement plan is a plan which provides employees with lifetime income. Employees should reach the age of 60 or 65 and have completed particular years of service with the company. People are very familiar with service retirement plans. The said plans are means of having a secured life after retiring as employees. The retiree can just relax and enjoy after working for how many years. However, you cannot tell what will happen until you reach the age of 60. We are not thinking here of negative situations but it’s better to be prepared in times of accidents. Disability retirement plans are just what you will need.

Unlike service retirement plan, the disability plan doesn’t have age requirement as long as the employee cannot perform his work due to injury or illness. The best thing the plan can do to you in case you’ve suffered injury is the money you’ll be receiving. After suffering from illness or injury, an employee is unable to do his task and that would mean no income. By applying for disability retirement plans, eligible employees will receive an income in his lifetime. The amount is commonly computed based on the highest salary received by a particular employee during his service with the employer.

The equivalent amount of income from the plan is up to 45% of the highest salary received. It’s not bad, right? At least, you will have an income even though you are not working anymore. In disability retirement plans, you must first be eligible in the program. An employee cannot easily apply. The said plan is intended for disabled individuals. Actually, there are two kinds of disability: short-term and long-term. In short-term disability, you will be benefited until your illness or injury heals. Bear in mind to apply right away. Sometimes, it takes weeks before your application is approved. Remember not to falsify the information required in the form.

There are cases when your application will be denied if you’ll declare falsified information. Regarding long-term disability, you will prove the extent of your disability. It must be severe so you will be entitled to long-term payments. Prove to them that you are really disabled and needs financial assistance in order to make ends meet. Disability retirement plans are a way of relief to disabled employees. It gives them hope regarding financial matters.