by K Vaze

Created on: May 20, 2008

Retirement is something we all look forward to.Just simple quiet life in which we can do whatever we choose to,but if we want that to happen in reality,planning for retirement and start saving as early as we can is essential.That's where doing your research about different retirement plans and options available for you comes in the picture.

Basically there are 3 types of retirement plans,Government sponsored,Employer sponsored,and Personal plans.Social security benefits is the most commonly known government sponsored plan.Which alone is not sufficient for a well funded retirement,that's why you will need other types of retirement plans like employer sponsored and/or personal plans as well.If you are wondering what are Employer sponsored retirement plans,it's actually very simple,they are the retirement plans where the employer also shares the contributions made to the retirement account of an employee.Well at least this is the basic definition,but when it comes to the types of employer sponsored retirement accounts,it couldn't be more complex.The employers offer these plans to attract and keep the employees working for them,and they offer significant tax advantages to both of them.

QUALIFIED AND NON-QUALIFIED PLANS:
Employer sponsored plans have 2 main categories Non Qualified plans and Qualified Plans.The qualification of the plans plan refers to the IRS regulations about the contributions limits,withdrawal age and investing the funds.The plans which follow these regulations are considered qualified plans,and the plans that are flexible regarding the contributions,benefits,and vesting the funds are considered non qualified plans.These kinds of plans are usually offered to the high level executives,and high ranked employees as an incentive.The two basic divisions in employer sponsored qualified plans are,Defined benefit plans,typically known as Pension plans and Defined contribution plans.

FUNDED AND NON FUNDED PLANS:
Most commonly the retirement plans offered by Government or the Non profit organizations for their employees are non funded defined benefits plans.Social security benefits is the well known example of these types of plans.These payments are usually made from the IRS from the revenue made and/or the deficit.Since the average life expectancy is on the rise these benefits are paid for longer and longer periods of time,which is becoming a very serious problem.On the other hand the defined contributions plans are the funded plans which means the employer

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