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I work in an office and we received a census for our business to fill out. I did a little research on the census bureau website and found out this particularly one was created in 2009. They want to know things like:

activity
revenue
gross payroll including bonuses
benefits including insurance and retirement plans
part time/full time employees including temps and independent contractors and number of each
utilities used
fuel usage
taxes paid
internet sales and other e-commerce

Before you say anything Yes I know there have been other census but this particular one was created in 2009.

I am not saying there is anything political behind it either but the line of questions is interesting considering the current political climate.

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A 401(k) plan is an employer-sponsored retirement plan. It is one of the most popular retirement planning methods in the United States as it allows workers to save for retirement while deferring income taxes on the saved money and earnings until the funds are withdrawn. In the most common plans the taxpayer can choose from a number of investment options, that usually combines mutual funds, bonds, or money market investments.

Roth IRA

The word IRA stands for individual retirement account. The distinguishing characteristic of a Roth IRA is its favorable tax structure. Contributions to an account are made only from income that has already been taxed, but withdrawals up to the total of contributions are federal income tax free, and withdrawals of earnings (anything above the total of original contributions) are usually free of federal income tax as well.

Roth 401(k)

A Roth 401(k) is a retirement savings plan that represents a unique combination of features of both a Roth IRA and a traditional 401(k) plan. Under the Roth 401(k), employees can contribute funds on a post-tax basis, instead of – or in addition – to pre-tax contributions to their traditional 401(k) plans.

Traditional IRA

A traditional IRA is a retirement account that is typically setup through a bank or brokerage. Unlike the Roth IRA, the only criterion for being eligible to contribute to a Traditional IRA is sufficient income to make the contribution. The main advantage of a Traditional IRA is that contributions are often tax-deductible.

Simple IRA

A simple IRA is an employer provided, non-qualified retirement plan similar to better known plans such as the 401(k). However it features simpler rules and less costly administration. Like a 401(k) plan, the Simple IRA is funded by a pre-tax salary reduction. However, contribution limits for Simple IRA plans are lower than for most other types of employer-provided retirement plans.

Social Security

The United States Social Security plan is a social insurance program funded by payroll tax contributions. It was setup to provide assistance for retired Americans, but taxpayers are strongly encouraged to start their own retirement plans as living off of social security benefits has proved difficult for many. In 2004, the U.S. Social Security system paid out almost $500 billion in benefits, which makes it the largest government program in the world and the single greatest expense in the federal budget.

403(b)

A 403(b) plan is a tax advantaged retirement plan available to public education organizations, many non-profit employers, and self-employed individuals. The plan is very similar to the popular 401(k) plan where payments are put into a 403(b) account before income tax is paid on it. The funds are then allowed to grow tax deferred until the money is taxed as income upon withdrawal.

457 Plan

The 457 plan is another kind of tax advantaged defined contribution retirement plan. However it is only available to governmental and certain non-governmental employers in the United States. The employer provides the plan that allows the employee make payment on a pre-tax basis. The plan is similar to a 401(k) plan, except, unlike a 401(k) plan, there is no 10% penalty for withdrawal before the age of 59 ½.

Thrift Savings Plan

The Thrift Savings Plan, or TSP, is a retirement plan for civilians who have been employed by the United States Government or who have participated in uniformed services. It offers the same type of savings and tax benefits that many employers offer their employees under 401(k) and similar plans.

Old Fashion Savings

Putting money into an old fashion savings account may seem like a good way to plan for retirement. However, it is not. All of the other plans listed on this list provide some type of tax benefits, and usually higher interest rates then a standard bank account.

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According to the IRS website, around 38,000 insured DB plans exist today equated to a high of 114,000 in 1985. Today, employers continue to authorize their employees to manage their retirement plan through a defined contribution plan. In return, it helps understate their costs to manage these types of retirement plans.
What is a Defined Benefits (DB) plan?

It’s a simple qualified employer-sponsored retirement plan. DB (defined benefits) plans offer tax incentives to both employers and participating employees. For example, your employer can generally deduct contributions made to the plan, while employees won’t owe taxes on those contributions until they begin receiving distributions.
Many people consider a defined benefit plan a traditional type of type of pension plan. Usually the employer is responsible for making all contributions to the defined benefit plan. However, in some cases, employees make contributions as well. Typically, defined benefit plans are found in larger companies.

Employers will commonly have a pension fund that is given to funding employee pensions under the defined benefit plan. Unlike defined contribution plans, the benefits that employees obtain are not indexed to fund performance. Accidentally, the company or employer is responsible for funding the plan, determining investment risk undertaken and managing the portfolio. The employer has a duty to fund any shortfall at the expense of the company as a result.

Defined benefit plans can also be qualified or unqualified. Qualified DB plans offer tax incentives to the beneficiary of the plan. Also, the employer can claim for tax benefits for contributions made to finance employee benefits.

In recent times, there has been a shift away from the defined benefit (DB) plans to defined contribution plans. As a concept, the defined benefit plan is a significant liability to companies who are obligated to pay an employee’s benefit for the duration of their retirement.

Defined Benefit pension plans help to satisfy your retirement wants. However, knowing what those needs are is critical. Now, you can read a clear instructional guide on how to calculate your retirement needs: at http://www.lifelongwealthmanagement.com/defined_benefits_plan.aspx

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What does this mean?  In essence, companies have found a way to game the nondiscrimination testing requirement established by the IRS for qualified retirement plans, in order to provide these SERP benefits to their executives and to gain immediate tax deductibility and protection from creditors.  SERPs, as non-qualified plans, are intended to provide executives with increased benefits above those allowed under qualified plan limits.  These plans must be constructed under IRC §409A rules, which includes a requirement that the SERP funds remain an asset of the company, subject to substantial risk of forfeiture.

Under these QSERPs, the payments are made from the pension plan, not out of the general assets of the company.  In this type of arrangement, a significant portion of the assets in the pension plan could be devoted to paying executive benefits, at the possible expense of the pensions for the remaining rank-and-file employees. 

Moving monies from non-qualified plans into qualified plans provides an immediate tax break for the company, and, in essence, removes the risk and virtually guarantees payment of the benefit to the executives.  As deferred compensation, the executive maintains the tax-deferral advantage associated with the benefit, without the inherent risk of forfeiture.  It will be interesting to see how this practice relates to 409A rules on deferrals.

Most disturbing about this practice is the disclosure issues.  The article states, “Companies don’t explicitly tell the IRS that an amendment is intended to shift supplemental executive benefits obligations into the regular pension plan.”[1]  In today’s environment of increased disclosure requirements and the desire for transparency, to many this may appear as a way to hide increased benefits to executives from stakeholders and the public.  Given the number of ways that the QSERP concept appears to flaunt the spirit of the ERISA pension and deferred compensation regulations, it is highly questionable whether it will pass the “sniff test”. Simply put, if it is so complicated that it defies understanding, and just doesn’t smell right, it is probably not right.   It should be interesting to see how quickly this practice may come to an end, now that the spotlight has been placed on QSERPs.

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