Qualified Plans are a category of employer-sponsored retirement plans. They meet specific federal requirements as outlined in the Employee Retirement Income Security Act (ERISA) of 1974. Designs vary in form and function, but all qualified plans share two characteristics. Plan contributions are eligible for immediate tax deductions.
Plan assets grow tax deferred until retirement. Strict rules accompany unique tax benefits. Regulations prescribe eligibility standards, vesting limitations, contribution limits, and required minimum distributions (RMDs). Employers with qualified plans also retain fiduciary liability. Businesses can manage fiduciary responsibilities by hiring specialists, such as Third-Party Administrators and certain Registered Investment Advisors (RIAs).
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