Affordable Group Pension Programs from Taylor Benefits Agency

Pension plans are a retirement benefit that invests (usually) pre-taxed earnings on behalf of an employee. Once an employe retires, they are entitled to regular payments (or a lump sum) from the plan, which varies based on the type of vesting offered by the plan. Vesting refers to the amount of time an employee must work in order to qualify for a pension plan.

Are you familiar with the Employee Retirement Income Security Act (ERISA)? This resource explains the standards and protections included in the law.

Most businesses will offer graded vesting, meaning the amount you receive in retirement is proportional to the time you spent with a company. Some may offer cliff vesting, in which the employee automatically qualifies after a certain number of years but loses the benefit if they leave before that. Here are the two main types of pension plans:

• Defined-benefit – Guarantees a fixed payment amount regardless of investment performance.

• Defined-contribution – The contribution amount is defined, but the total payout is based on the success of the investments.

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