After retirement, workers can continue to receive monetary compensation from his employer through a pension. The two main types of pension plan is a defined benefit plan and defined contribution plan. For help, it is best to refer to a law firm in your area.
In a defined benefit plan, the benefit to the employee is normally based on the operating time and the amount of wages. Employees do not have a separate account because the money is administered through a trust established by the employer. In a defined contribution plan, the employer makes regular deposits into an account established for each employee. The employee is not guaranteed to receive a fixed amount during retirement, only the amount that is in your account.
Pensions are regulated by federal statutory law. In response to the incorrect administration of the funds of defined benefit plans, Congress passed the Income Security Retirement Employee (Employee Retirement Income Security Act). All employers engaged in interstate commerce and provide defined benefit plans must comply with the guidelines of this law. The law does not apply to defined contribution plans.
Under this law, employers must:
- Provide the Department of Labor of the United States (U.S. Department of Labor or DOL, for its acronym in English) and its employee’s detailed descriptions of the benefits received.
- Giving employees a percentage of retirement benefits after working a certain number of years or have reached a certain age.
- Provide adequate funding for the pension plan.
The law stipulates which employees should receive a pension. It also requires that the plan provides pension benefits to surviving family members after the death of the employee. In addition, the law created Guaranty Corporation Pension Benefit (Pension Benefit Guaranty Corporation) to secure the defined benefit plans. Employers must pay premiums for this insurance cover plans. There are many laws governing the termination of plans.
To encourage employers to provide pension plans that comply with the guidelines of the federal government, such as the Law on Income Security Retirement Employees, Congress passed a series of tax cuts for employers that field respected. Title 26 of the Internal Revenue Code (IRC Internal Revenue Code or, for its acronym in English) establishes requirements that employers need for special tax treatment.