Summary
Qualified retirement plans receive favorable income-tax treatment. Employer contributions are tax-deductible and not considered taxable income to the employees; investment earnings accumulate income-tax free; and pension benefits attributable to the employer’s contributions are not taxed until the employee retires or receives the funds.
Under the tax law, qualified pension plans must meet certain minimum coverage requirements, which are designed to reduce discrimination in favor of highly compensated employees.
All employees who are at least age 21 and have 1 year of service must be allowed to participate in a qualified retirement plan.
A retirement plan has a normal retirement age, an early retirement age, and a deferred retirement age. ...
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