and Other Savings Plans
An employer may offer several types of savings plans to its
employees. In its simplest form, a business may arrange to make regular
deductions from employee paychecks and deposit these funds in any number of
pension plans. A slightly more complex arrangement is for the company to match
some portion of the contributed funds and deposit them together with the
employee funds. These contributions may vest immediately or at some point in the
future; vesting gives ownership in the company-contributed amount to the
employee. The company may also retain the contributed funds and pay back
employees with company stock.
If funds are being matched by the company, there will be an upper
limit on the amount of matching, as well as a matching percentage. For example,
a company may contribute 50 percent of the amounts contributed by its employees,
up to a maximum of 6 percent of an employee's total pay.
This topic was covered in considerable detail in the section
titled "Pension Plan Benefits," in Chapter 6, "Benefits."