Jump to content

Separation Incentive Plan--$$ contributed to DC plan if employee agrees to retire


Guest Kathleen Meagher
 Share

Recommended Posts

Guest Kathleen Meagher

I've been asked to review a "separation incentive plan" for a gov't client. It's a money purchase pension plan set up to benefit employees who agree to retire early. It appears to provide for a one-time contribution for each eligible employee who agrees to retire.

I believe the plan is intended to continue indefinitely, although it seems that each participant would receive only one contribution. Employees could direct the investment of their contributions. I've not been told the contribution formula, but I believe it will be integrated with Social Security.

Has anyone seen/worked with one of these animals?

Link to comment
Share on other sites

Some Govts such as FLA have established qualified plans for one time contributions as a incentive for voluntary retirement. Contributions usually include accrued vacation pay or disability pay. The advantage of making contributions to these plans is that no FICA tax is owed and the employee can rollover the distribution to an IRA.

mjb

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...