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How do I know Retirement plan by my employer

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How do I know Retirement plan by my employer

Postby guest » Wed Mar 02, 2016 3:15 pm

If your employer checked the "Retirement plan" box within Box 13 of your 2015 Form W-2, this indicates you were an active participant in your employer's retirement plan during the year.

There are two types of employer sponsored retirement plans, defined contribution and defined benefit. The rules used to determine whether you are covered by a plan are different for the two types of plans.

Defined Contribution Plan
A defined contribution plan is a plan that provides for a separate account for each person covered in the plan. A 401(K) plan through an employer is a defined contribution plan. The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings or losses on those contributions. Generally, you are covered by a defined contribution plan if amounts are contributed or allocated to your account for the plan year that ends within your tax year. Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account.

Defined Benefit Plan
A defined benefit plan is any plan that is not a defined contribution plan. In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. Defined benefit plans include pension plans and annuity plans. If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, your are covered by the plan. This rule even applies if you declined participation in the plan, did not make a required contribution, or did not perform the minimum service required to accrue a benefit for the year.
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