What Makes A Retirement Plan Qualified?

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    Steve Savant
    Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
    Generally speaking, a qualified retirement plan is one legislated by the government with tax advantaged features to attract American workers to save for retirement. One example is The Employee Retirement Income Security act of 1974 (ERISA) that addresses defined benefit and defined contribution plans. And one of the most popular employer sponsored defined contribution retirement plans is a 401(k). Plan participants can make pretax contributions that accumulate tax deferred and some employers match a portion of the employee's contribution. Of course distributions at retirement are taxed as ordinary income and there are penalties for distributions before age 59 1/2.
    Answered on August 24, 2013
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