401 (k) Plan Benefits
A 401(k) plan is a retirement savings account which derives its name from the section of the Internal Revenue Code that establishes such plans.  These plans are funded in part or in whole by the employee thus shifting much of the financial burden of retirement savings from the employer to the employee.  In most instances, a 401(k) plan is administered by the employer but “participant directed” which allows the employee to select among different mutual funds offered by the plan that emphasize stocks, bonds and money market investments as well as the option to invest in company stocks.  The employee bears the risks and reaps the rewards of the investment choices unlike other types of pension plans where the employer bears those responsibilities.  Furthermore, 401 (k) plans unlike other types of pension plans are not insured by the Pension Benefit Guaranty Corporation (“PBGC”) which is the federal agency that takes over insolvent plans under its auspices.

Traditional 401(k) accounts are funded with pre-tax dollars thus providing the employee a tax savings in the contribution year, and taxes are paid when the original contribution and earnings are withdrawn.  Employer matching funds, if any, are also contributed on a pre-tax basis.  On the other hand, a Roth 401 (k) plan is funded with after-tax dollars and income tax is paid in the contribution year and qualified distributions are tax-free. However, employer matching funds, if any, are contributed on a pre-tax basis similar to a traditional plan.  With both the traditional and Roth plans, employer contributions may be subject to “vesting rules” whereby the employee is required to reach a minimum number of years of service prior to entitlement to employer contributions.

Bruce A. Tischler at firm of Greene & Tischler, P.A. welcomes the opportunity to assist you with your 401 (k) claim.



ERISA Pension Plan Benefits
Generally, there two general types of pension plans, i.e. Defined Benefit Plans and Defined Contribution plans.  Defined Benefit Plans usually state the employee’s monthly benefit to be paid at retirement.  The benefit is independent of the underlying investments funding the plan, and the employer not the employee bears the risks and reaps the rewards of those investments.  Some Defined Benefit Plans are structured on a cash balance basis (“Cash Balance Plans”) wherein the promised retirement benefit is stated in terms of an account balance rather than a monthly benefit although the employer bears the risks and reaps the rewards of the underlying investments as with all Defined Benefit Plans.  Also, with most Defined Benefit Plans the employee may have the option (with spousal consent when applicable) to take the benefit in a lump sum rather than monthly annuitized payments but regardless of the payment election those benefits are not payable before the employee’s normal retirement age absent certain limited circumstances.  Defined Benefit and cash Balance Plans are both insured by the Pension Benefit Guaranty Corporation (“PBGC”) which is the federal agency that takes over insolvent plans under its auspices.

On the other hand, Defined Contribution Plans specify the amount of contributions to be made by the employer toward an employee’s account.  The retirement benefit is dependent on the amount of the contributions as well as the gains or losses of the account.  That is, there is no guaranteed monthly benefit and the employee not the employer bears the risks and reaps the rewards of the underlying investments.  However, most Defined Benefit Plans provide greater flexibility than Defined Benefit Plans and the employee may usually access account funds upon termination of employment and prior to the employee’s normal retirement age.  Sometimes, the employer will convert a Defined Benefit Plan to a Defined Contribution Plan.  When this occurs, the employee benefits that were accrued under the Defined Benefit Plan may not be “cut-back” under the Defined Contribution Plan.  However, the employee’s continued participation in Defined Benefit Plan and the rate at which contributions are made to the Defined Contribution Plan are at the employer’s discretion.  Furthermore, Defined Contribution Plans like 401 (k) accounts are not  insured by the Pension Benefit Guaranty Corporation (“PBGC”) which is the federal agency that takes over insolvent plans under its auspices. 

Bruce A. Tischler at firm of Greene & Tischler, P.A. welcomes the opportunity to assist you with your pension claim.