Accounting

PENSION PLAN [pic]provides replacement for salary when a psyche is no longer working. In the case of a outlined put on reward plan, the employer or nub contributes to the plan, which pays a predetermined gather for the rest of the employees life found on space of service and salary. Payments whitethorn be make either at once or through an annuity. premium payments be taxable income to recipients in the year received. The employer or union has fiduciary responsibility to seat the reward funds in stocks, bonds, real estate, and other as repairs; net a satisfactory ramble of return; and make payments to retired workers. Pension funds holding trillions of dollars ar one of the largest investment forces in the stock, bond, and real estate markets. If the employer defaults, pension plan payments are unremarkably guaranteed by the pension proceeds guaranty corporation (PBGC). In the case of a define contribution pension plan, such(prenominal) as a 401(k) or 403(b) plan, employees make whether or not to contribute to the plan offered by the employer, who whitethorn or may not match employee contributions. Pension benefits are determined by the amount of assets built up by the employee during his or her days of contributions. Self-employed individuals can overly set up pension plans such as keogh plans. An individual retreat account (IRA) is a form of pension plan. See also vesting. © Copyright 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barrons Educational Series, Inc. [< Previous ledger entry... ...Next entry >] ...Dictionary of pay and investiture Terms... |APA | Chicago | Harvard | MLAPENSION PLAN. (2006). In Dictionary of Finance and Investment Terms.

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