What is a Qualified Retirement Account?

With all of the different options out there for choosing the right retirement plan for you, the most important thing to remember is to invest in a qualified retirement account. This means that whichever plan you decide to go for, it has to meet all of the requirements of the Internal Revenue Code and, as a result, it will be subject to certain tax benefits. To do this, the plan must also be set up for the sole benefit of the employee and their beneficiaries.

Qualified retirement accounts fall into two categories: Defined Benefit Plans and Defined Contribution Plans. Within these two categories, there are further subdivisions: Pension Plans, Profit Sharing Plans, Money Purchase Plans, Stock Bonus Plans and Annuity Plans.

Particular qualified retirement accounts include: 401(k) plans, 403(b) plans, 457 plans, SIMPLE IRAs, SEP IRAs and Keough Plans.