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GROUP RETIREMENT


Along with Health and Welfare benefits, many companies also provide a group retirement plan for their employees.  Like Health and Welfare benefits, a group platform provides employees with additional benefits that are not available in the individual market.


When people hear the phrase “group retirement plan” most think of 401k plans.  This is not 100% accurate, although most retirement plans offered by companies today do utilize Internal Revenue Code (IRC) Section 401(k).  A group retirement plan can be classified as a “Qualified Plan,” if these following the ERISA and IRS regulations for the tax benefits these provide, or as a “Non-Qualified Plan” which do not have to follow the regulations for the “Qualified” classification.  Such as the Executive Benefits also discussed in its own section on this website.  A qualified group retirement plan is what is typically provided for general employee benefits.


Qualified Retirement Plans


Qualified Plans are split into two major categories:

 

Defined-Benefit plans are the plans that are synonymous with traditional pension plans.  These plans provided a guaranteed benefit to the retired employee based on criteria set by the company.  These factors may have included the employee’s attained annual earnings at retirement, years of service, etc.  The company directed the investments giving very little control to the employee. 

Defined-Contribution plans have been the plan most companies have implemented over the last 30 years.  Although salary deferrals were allowed (i.e., cash or deferred arrangements or CODAs) prior to IRC Section 401(k), it was not until 1980 when the Revenue Act of 1978 was enacted that plan contributions through salary reductions was permanently allowed.

A plan type that is a hybrid between the Defined-Benefit and the Defined-Contribution plan are the Cash Balance Plans.  The plans are geared towards high earners who want to maximize their contributions beyond what is possible with other Qualified Plans.  


Non-Qualified Retirement Plans

The Non-Qualified Plans discussed here are the Group VUL Plans for professional firms with a large percentage of Highly Compensated Employees and the plans discussed in the Executive Benefits Section. 

For more information, please contact Bridgeport Benefit Advisors.
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The material on this page is intended as general descriptions of the concepts presented.  It is for educational purposes only and it not intended to provide specific financial or tax advice.  These descriptions cannot take into account your specific conditions and situation including the data required for underwriting purposes, financial circumstances, risk tolerance, and other factors.