Pensions

• A pension plan is a retirement plan completely funded by your employer. The retirement plan may be fully insured, or just partially insured. This means that the retirement plan is partially or fully invested in insurance policies. At retirement, the employer offers you one of several payments options. You may set aside money for your spouse, or you may take all of the money yourself as either lifetime payments or a lump sum of money. Lifetime payments and lump sum payments require that your spouse sign a consent form acknowledging that no future benefits will be paid out to her at your death.
  
  

401(k) Plans

• A 401(k) plan is sponsored by your employer. Your employer may or may not match your contributions in one of several ways. Your employer may provide no contributions whatsoever, she may provide a fixed dollar amount contribution every year, she may provide a contribution that represents a percent of your annual compensation or she may provide a contribution which matches your contribution up to a certain limit. For example, she may provide $0.25 for every dollar you contribute to your 401(k) plan. Contributions may be either on a pretax basis (traditional 401(k)) or on an after-tax basis using a Roth 401(k) designation. Whether you can make traditional or Roth contributions depends on what your employer allows.
  
  

IRAs

• An IRA is an Individual Retirement Account. These plans allow you to contribute money to the account on either a tax deductible basis or on an after-tax basis. You receive no employer contribution unless the IRA is a Simplified Employee Pension (SEP) or a Savings Incentive Match Plan for Employees (SIMPLE). Distributions from a traditional IRA plan are taxable as income. Distributions from Roth IRAs are tax-free. SIMPLE IRAs require employers to make contributions which are $1 for $1 up to 3 percent of your annual compensation. SEP IRAs require employers to make contributions each year that are equal for all employees. The employer is not required to make contributions to SEP IRAs, however. Distributions from both SIMPLE or SEPs are taxable as income.
  
  

Annuities

• Annuities are used as part of a non-qualified retirement plan. Non-qualified retirement plans are retirement plans which allow discrimination. These plans allow employers to provide retirement benefits to select employees without having to offer benefits to everyone. This differs from other retirement plans, since benefits normally must be distributed equally among all participants in the plan. Non-qualified plans are normally used as a bonus plan to supplement or replace an employer-based plan.