Retirement Plans

401(k) Plan
A 401(k) is a type of retirement plan that allows employees to save and invest for their own retirement. Through a 401(k), you can authorize your employer to deduct a certain amount of money from your paycheck before taxes are calculated, and to invest it in the 401(k) plan. Your money is invested in investment options that you choose from the ones offered through your company's plan. The federal government established the 401(k) in 1981 with special tax advantages, to encourage people to prepare for retirement. A type of defined contribution plan that allows employee salary deferrals and/or employer contributions.

SIMPLE 401(k) Plan
A type of defined contribution plan available to the small business owner with 100 or fewer employees.  Under a SIMPLE 401(k) Plan, an employee can elect to defer some compensation.  Unlike a standard 401(k) plan, the employer must makeeither: (1) a matching contribution up to 3% of each employee's pay, or (2) a non-elective contribution of 2% of each eligible employee's pay.

403(b) Tax-Sheltered Annuity Plan
Sometimes called tax-sheltered annuities, tax-deferred annuities or tax-sheltered custodial accounts, 403(b)s are retirement savings plans that allow employee contributions to grow tax deferred until withdrawn at retirement. 403(b) plans are designed for employees of eligible tax-exempt organizations,

Simplified Employee Pension (SEP)
Simplified Employee Pensions (SEPs) provide a simplified method for employers to make contributions to a retirement plan for their employees.  Instead of establishing a profit sharing or money purchase plan with a trust, employers can adopt a SEP agreement and make contributions directly to an individual retirement account or an individual retirement annuity established for each eligible employee.

SIMPLE IRA Plan
Tax-favored retirement plans that certain small employers (including self-employed individuals) can set up for the benefit of their employees, a SIMPLE IRA plan is a written salary reduction agreement between employee and employer that allows the employee, if eligible, to choose to have the employer contribute the salary reductions to a SIMPLE IRA on the employee's behalf.

Profit-Sharing Plan
A type of defined contribution plan which allows discretionary annual employer contributions.

Money Purchase Plan
A type of defined contribution plan in which employer contributions are fixed.

Defined Benefit Plan
A type of plan that is funded primarily by the employer and whose contribution is actuarially determined.