What You Should Know About Your Retirement Plan (2006) by U.S. Department of Labor Contributors

By U.S. Department of Labor Contributors

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30 GLOSSARY 401(k) Plan – In this type of defined contribution plan, the employee can make contributions from his or her paycheck before taxes are taken out. The contributions go into a 401(k) account, with the employee often choosing the investments based on options provided under the plan. In some plans, the employer also makes contributions, matching the employee’s contributions up to a certain percentage. SIMPLE and Safe Harbor 401(k) plans have additional employer contribution and vesting requirements.

Gov The Treasury Department’s Internal Revenue Service is responsible for the rules that allow tax benefits for both employees and employers related to retirement plans, including vesting and distribution requirements. The IRS maintains a taxpayer assistance line for retirement plans at 1-877-829-5500 (toll-free number). The call center is open Monday through Friday. 30 GLOSSARY 401(k) Plan – In this type of defined contribution plan, the employee can make contributions from his or her paycheck before taxes are taken out.

ACTION ITEM If you have any questions about the management of the plan and its assets, contact your plan administrator. 24 CHAPTER 8: YOUR BENEFIT DURING A PLAN TERMINATION OR COMPANY MERGER As noted at the beginning of this booklet, employers are not required to offer a retirement plan and plans can be modified and/or terminated. WHAT HAPPENS WHEN A PLAN IS TERMINATED? Federal law provides some measures to protect employees who participated in plans that are terminated, both defined benefit and defined contribution.

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