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obtain, which can lead to a lot of volatility. However, there is a stan- dard that the fund managers must follow, so that the contributing employees don’t find all their money gone at retirement.

As the employee, your main concern is the amount of money you will receive in the form of benefits once you have retired. Generally, a pension plan is considered good when employees receive between 70 and 80 percent of their net preretirement pay. However, ascertain- ing how much you will receive will become more difficult to do as more companies shy away from the defined benefits plan and towards the defined contribution plan. From an employer’s perspec- tive, the move is an easy decision because the economic future is unknown. Employers simply don’t want to find themselves responsi- ble for paying out benefits that they don’t have the funds for. Unfor- tunately, for the employees, this means that you are required to take an additional part in your retirement funding.

TAX IMPLICATIONS. Employer-sponsored retirement plans are often referred to as qualified plans. This means that the plans qualify for important tax benefits under the Internal Revenue Code. For the employer, these benefits include a current tax deduction on the pay- ments. For the employee, the benefits include deferral of income tax on the employer contributions. Finally, earnings accumulate on a tax- deferred basis. Most distributions from qualified plans are also eligi- ble for tax-free rollovers to IRAs and other retirement plans.

Special note: Some employees have decided to forego mak- ing their pension plans qualified. These nonqualified pension plans receive no special tax treatment, nor do any contribu- tions made to them. Any contributions made by an employee to a contributory pension plan that is nonqualified is still fully taxable and treated as ordinary income received.

Supplemental Plans Supplemental plans are voluntary for employees. These plans offer employees the chance to increase the amount of funds set aside for their retirements, as well as shelter some of their income from

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