There are several retirement plans that are managed by an individual's employer. These plans are designed to help employees save for retirement and often come with certain tax advantages. Here are some of the most common types of employer-managed retirement plans:
1. 401(k) Plans: A 401(k) plan is a type of retirement plan that allows employees to contribute a portion of their salary to a tax-advantaged investment account. Many employers also offer a matching contribution, which can help employees grow their retirement savings even faster. Contributions to a 401(k) plan are typically made on a pre-tax basis, meaning they are deducted from the employee's salary before taxes are calculated. This can provide immediate tax benefits.
2. 403(b) Plans: Similar to a 401(k) plan, a 403(b) plan is a retirement plan for employees of certain tax-exempt organizations, such as schools, hospitals, and religious organizations. Contributions to a 403(b) plan are also made on a pre-tax basis, and employers may offer a matching contribution.
3. 457 Plans: A 457 plan is a retirement plan available to employees of state and local governments and some tax-exempt organizations. Contributions to a 457 plan are made on a pre-tax basis, and employers may offer a matching contribution.
4. Defined Benefit Plans: Unlike 401(k), 403(b), and 457 plans, which are defined contribution plans, a defined benefit plan is a type of retirement plan that provides a specific benefit amount to employees upon retirement. The benefit amount is typically based on factors such as the employee's salary and years of service. Defined benefit plans are often funded entirely by the employer.
5. Pension Plans: Pension plans are a type of defined benefit plan that are typically offered by government entities and large corporations. These plans provide a guaranteed income stream to employees in retirement, based on a formula that takes into account factors such as the employee's salary and years of service.
It's important to note that the availability of these retirement plans may vary depending on the employer and the employee's eligibility. Additionally, the specific details and rules of each plan can vary, so it's always a good idea to consult with a financial advisor or the plan administrator for more information about a particular retirement plan.