INTRODUCTION TO QUALIFIED PLANS CHAPTER 20

A. Management Objectives –Retirement saving –Tax deferral –4 Rs –Encourage productivity –Discourage collective bargaining

B. Government Role –Social security –Early tax benefits –Current policy issues: Tax revenue loss Discrimination in favor of highly compensated employees Encouraging private savings Interest group pressure Mandatory retirement plan coverage

C. Qualified Plan Characteristics –Eligibility and plan coverage –Nondiscrimination in benefits and contributions –Funding requirements –Vesting requirements –Limitations on benefits and contributions –Payout restrictions –Top-heavy rules

D. Tax Benefits of Qualified benefits –immediate employer deduction –No current tax to employee –Tax deferral and lump sum provisions

E. Categories of Qualified Plans –Pension and profit-sharing plans –Defined- benefit an defined-contribution plans –Specific types of qualified plans: Defined-benefit pension plan Cash-balance pension plan Target-benefit pension plan Money-purchase pension plan Profit-sharing plan 401(k) plans ESOP

G. Government Regulation: –IRC –ERISA –PBGC –Other