type of retirement plan meets the guidelines of the Internal Revenue code
Section 401(a) and the Employee Retirement Income Security Act of 1974. It is therefore eligible for favorable tax
treatment. These plans allow employers
to deduct yearly contributions for each employee. Such contributions are tax deferred until
taken out for each participant and some of the taxes can be delayed even longer
by transferring into a different IRA (Individual Retirement Account).
Additional meaning of Qualified Retirement Plan:
There are two types of qualified retirement plans: Defined-benefit plans and Defined-contribution plans.
Defined-contribution plans may include, 401(k) plans, profit-sharing plans and money-purchase pension plans.