Many employers want to provide their employees with retirement benefits or with a program to accumulate a nest egg they can use to meet their income needs after they have left the workforce. Some employee benefit plans accomplish the goal of providing employees with retirement income by making periodic payments, such as monthly payments, to retirees for the remainder of their lives following retirement. A plan designed primarily to provide a livelihood during retirement by paying benefits at regular intervals after an employee retires is often referred to as a pension plan.
Other employee benefit plans allow employees to participate in the employer’s current or accumulated profits and to defer the receipt of income to or beyond the point when covered employment ceases. Plans of this kind can take the form of a “profit-sharing plan” or a “stock bonus plan.” (A stock bonus plan is very similar to a profit-sharing plan in most respects, but it is designed to provide benefits in the form of employer stock.) Profit-sharing plans and stock bonus plans could be established merely to provide deferred income to employees, without provisions specifically designed to provide retirement income. However, most profit-sharing plans and stock bonus plans are...
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