Employer sponsored retirement plans: Key differences
INSIGHT ARTICLE |
Authored by RSM US LLP
Employers have a variety of options when considering what type of qualified retirement plan to offer employees. While most Americans view Social Security as the biggest source of their retirement income, the retirement plan offered through an employer is a critical retirement source. There are two main categories of employer-sponsored retirement plans that provide supplementary income: defined benefit plans and defined contribution plans.
In years past, retirees relied on defined benefit plans, commonly referred to as pensions, sponsored by large companies to provide supplemental income. Over the past 30 years, however, defined contribution plans have become more common than defined benefit plans. In fact, according to the Bureau of Labor Statistics, 64% of private industry workers had access to defined contribution retirement plans through their employer in 2019 while only 16% of private industry workers had access to defined benefit retirement plans.1
Retirement plans can be complicated and expensive to administer. Selecting the best plan for your organization involves a thorough consideration of a company’s goals and objectives.
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This article was written by Mary Chiodo, Jason Linder and originally appeared on 2021-06-16.
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