Define: Qualified Retirement Plan

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Definition: Qualified Retirement Plan



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Full Definition of Qualified Retirement Plan


A qualified retirement plan meets the requirements of the IRS code section 401(a) and the ERISA and therefore receives favourable tax treatment.

That favourable tax treatment available to a qualified retirement plan includes the option for an employer to deduct the allowable contributions it makes annually to its employee’s qualified retirement plan. Additionally, a qualified retirement plan gives employees the option to save a portion of their income and the earnings on that income without paying taxes on it until withdrawal. Broadly, a qualified retirement plan will fit into one of two categories: defined benefit or defined contribution. The defined benefit qualified retirement plan is fading out of style as its cousin, the defined contribution qualified retirement plan, becomes more popular. A defined benefit qualified retirement plan is a plan that guarantees a specific retirement benefit based on an employee’s salary history and years of service. A defined contribution qualified retirement plan is a plan that pays a retirement benefit based on the amount of money contributed to the account and the account’s rate of investment growth.


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Definition Sources


Definitions for Qualified Retirement Plan are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th February, 2020