Pentoilke

The Internal Revenue Code (IRC) and the Employee Retirement Income Security Act of 1974 (ERISA) set forth stringent requirements, which if met by an employer-offered retirement plan, allow for significant tax benefits.

The first of these four tax benefits applies to the employer’s tax deductions. If the plan includes matching contributions by the employer on the behalf of employees participating in the retirement plan, these contributions qualify as allowable tax deductions. Two of the remaining benefits apply to the employee participants. One is that contributions made by the participant, and any earnings from these contributions (such as interest), will not be taxed until the year funds become available (i.e. until retirement goes into effect). Another is that in certain situations, when those funds are transferred into an Individual Retirement Arrangement (IRA), taxes may be delayed even further. And the last of these four benefits applies to the trust which holds the funds—earnings are not taxed to that trust.

These benefits can have a considerable positive impact on the finances of both the employer offering the plan and the employees who participate, making planning for a comfortable retirement while young possible for those who otherwise would not be able to do so.