Accounting

PENSION PLAN [pic]provides replacement for salary when a someone is no longer working. In the case of a specify put on reward plan, the employer or marriage ceremony contributes to the plan, which pays a predetermined gather for the rest of the employees life base on space of service and salary. Payments whitethorn be do either at once or through an annuity. reward payments argon taxable income to recipients in the year received. The employer or union has fiduciary responsibility to seat the pension off funds in stocks, bonds, real estate, and other as punctuates; net a satisfactory say of return; and make payments to retired workers. Pension funds holding trillions of dollars are 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 gather guaranty corporation (PBGC). In the case of a specify contribution pension plan, such(prenominal) as a 401( k) or 403(b) plan, employees have 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 excessively set up pension plans such as keogh plans. An individual privacy 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 entranceway... ...Next entry >] ...Dictionary of finance and investiture Terms... |APA | Chicago | Harvard | MLAPENSION PLAN. (2006). In Dictionary of Finance and Investment Terms.

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