Employer-Sponsored Plan
A type of benefit plan that an employer offers for the benefit of his/her employees at no or a relatively low cost to the employees. If employees participate in the plan, they will benefit from its low-cost method of obtaining discounted services. The benefit to the employer is that initiating these plans usually has some tax-deductible component, and sponsoring benefits is generally a good method of retaining valuable employees. Investopedia Says:
Different classes of employer-sponsor plans include retirement saving plans and group healthcare plans.
Employer-sponsored retirement savings plans are useful for the employees because it presents them with an automatic savings device, provides tax breaks and, in some cases, offers free money in terms of employers matching the employee's contributions. Some examples of retirement employer-sponsored savings plans are 401(k)s and the some forms of IRAs.
Group healthcare plans are often seen as a premium for employees due to the rising cost of healthcare services. Related Terms:
401(k) Plan
Individual Retirement Account - IRA
Plan Sponsor
Roth 401(k)
Salary Reduction Contribution
Simplified Employee Pension - SEP |