What Is a Qualified Retirement Plan?

Qualified Retirement Plan

A qualified retirement plan is a retirement plan established by an employer that is designed to provide retirement income to designated employees and their beneficiaries, which meets certain IRS Code requirements in terms of both form and operation. Common plan types are 401(k) plans, pension plans, and profit-sharing plans. A qualified retirement plan may allow for both employer and employee contributions. Employers must follow procedures to ensure participants and beneficiaries are able to receive their benefits. They must also stay apprised of changes in retirement plan laws and regulations. Qualified retirement plans provide certain tax advantages to employers and tax deferral advantages to employees who are contributing. Taxes on earnings from the contributions are also deferred until the employee withdraws them from the plan.

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law related to qualified retirement plans. ERISA helps to protect the retirement funds of U.S. employees within private industry and also sets minimum plan standards.

Winston & Strawn counsels clients on virtually all aspects of tax-qualified retirement plans.