Retirement Planning Programs

For many people, a cornerstone of retirement planning is participation in an employer-sponsored savings program. Ideally, this should start early in one’s career to maximize the effects of compound interest. Additional retirement programs are available to self-employed persons as well as individual retirement accounts (IRAs) for all workers with earned income.

Most employer retirement programs are qualified plans, meaning they qualify for special tax benefits. For example, a plan must be in writing and cannot discriminate among employees at different salary levels. In return, employers receive a tax deduction for their contributions and employees need not include these employer contributions in their taxable income. In certain situations (e.g., to attract highly paid executives), companies may offer nonqualified savings programs.