June 2, 2016

401(a) Plan

Your Guide

A 401(a) plan is a qualified retirement plan.

The term “401(a) plan” is often used because that is the section of the Internal Revenue Code (IRC) under which the governing rules for qualified retirement plans are found. ( IRC Section 401(a), or IRC § 401(a). )

The following are qualified retirement plans:

Referring Cite

IRC § 401(a), IRS Publication 560

Additional Helpful Information

A profit sharing plan can include a salary deferral feature, which is also known as a ‘qualified cash or deferred arrangement’. The salary deferral feature is referred to as a 401(k) plan, because it is governed under Section 401(k) of the IRC.

A 401(k) salary deferral feature can also be included in a a stock bonus plan, a pre-ERISA money purchase plan, or a rural cooperative plan.

Written By

Retirement Dictionary Staff

Frequently Asked Questions Regarding

Answer

Yes. You are not treated as an active participant for any taxable year because of the following:
• You are covered under social security or railroad retirement
• You receive retirement benefits from a previous employer’s plan
• The only reason you participate in a plan is because you are a member of a reserve unit of the armed forces and both of the following conditions are met.
o The plan you participate in is established for its employees by:
1. The United States,
2. A state or political subdivision of a state, or
3. An instrumentality of either (a) or (b) above.
• You did not serve more than 90 days on active duty during the year (not counting duty for training).
• The only reason you participate in a plan is because you are a volunteer firefighter, and both of the following conditions are met.
o The plan you participate in is established for its employees by:
1. The United States,
2. A state or political subdivision of a state, or
3. An instrumentality of either (a) or (b) above.
o Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement, (when expressed as a single life annuity commencing at age 65).

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