Qualified retirement plan

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A qualified retirement plan is a plan that meets the requirements of Internal Revenue Code Section 401(a) and the Employee Retirement Income Security Act of 1974 (ERISA) and therefore qualifies for favorable tax treatment.

For the employer, these plans allow deduction of annual allowable contributions by each participant.

For the employee, contributions and earnings are tax-deferred until withdrawn.

Broadly speaking, a qualified retirement plan will fit into one of two categories: defined benefit or  defined contribution.