Employer Benefits Plan Definitions

What Is a 401(k) Plan?

A 401(k) plan is a company-sponsored retirement plan with tax advantages for employees and business owners.  Participants can contribute pre or post tax basis and choose from a menu of investment options.

What Is 403(b) Plan?

A 403(b) plan is a retirement account for certain employees of public schools and tax-exempt organizations.  Participants include teachers, school administrators, professors, government employees, nurses, doctors, and librarians.

What Is a 457 Plan?

457 plans are IRS-sanctioned, tax-advantaged employee retirement plans offered by state, local government, and some nonprofit employers.  Participants are allowed to contribute up to 100% of their salary, provided it does not exceed the applicable dollar limit for the year.  Interest and earnings generated from the plan do not get taxed until the funds are withdrawn.

What is a Non-Qualified Deferred Compensation 409A Plan?

A non-qualified deferred compensation plan or agreement simply defers the payment of a portion of the employee’s compensation to a future date.  The amounts are held back (deferred) while the employee is working for the company.  These plans are typically used to recruit, reward, and retain key employees.