Qualified Retirement Plans


Qualified retirement plans are divided into two major categories; defined contribution and defined benefit. Qualified retirement plan contributions and earnings “qualify” for favorable tax treatment if the retirement plan complies with Employee Retirement Income Security Act of 1974 (ERISA) and Internal Revenue Service rules and regulations. Defined contribution retirement plans define the “contribution” amounts deposited into qualified retirement plan accounts with investor’s bearing the risk of investment returns. Defined benefit retirement plans define the “benefits” received from the qualified pension plan, based on a salary and years of service formula, without regards to investment returns. The vast majority of qualified retirement plans are categorized as defined contribution plans.

Brokerage firms and financial advisors provide pension plan participants with valuable guidance concerning their defined contribution retirement plans in three areas. First, they can determine what voluntary contributions participants should make, in addition to employer contributions, to meet their retirement income goals. Second, they can provide advice concerning the suitable allocation of investment funds across the various investment options, over time. Third, they can advise clients concerning the taxation of withdrawals from the qualified pension plan, including premature withdrawals. Financial advisors and their brokerage firms are required by ERISA rules and regulations to act as a fiduciary when providing investment advice.

The various types of qualified retirement plans for individual, self-employed or participant in employer-sponsored plans include:

  • IRA Account;
  • Roth IRA Account;
  • 457 Deferred Compensation Plan;
  • TSA Account;
  • 401(i) – Sole Owner/Employee;
  • Simple Plan;
  • SEPP;
  • Keogh Plan;
  • 401(k) Plan; and
  • Defined Benefit Plan.

It is important to determine the suitable asset allocations for investments in a Qualified Retirement Plan based on your investment objectives, risk tolerances and investment time horizon.

Investors are advised to seek competent financial, tax and legal advice concerning the decisions they make with their investments. Klayman & Toskes, P.A. can provide you with a free consultation concerning any securities industry violations related to the handling of your investments accounts by a full-service brokerage firm or registered investment advisor.

Information contained on this webpage is for educational purposes only
and should not be considered legal advice.
No Information contained on this website creates an attorney-client relationship.