What Is Group Retirement Savings Plan?

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   Marlin McKelvy

   President, Consumer Directed Benefit Solutions, Memphis, Tennessee

   Typically a group retirement savings plan is an employment based retirement savings plan associated with the company you work for.  The 401K has become the dominant form of such retirement plans as they are referred to as defined contribution plans rather than the defined benefit pension plans common in past years.  Defined benefit pension plans promised the retiree a definite monthly benefit upon their meeting the retirement requirements of the plan and thus created an open ended liability to the employer.  Under the 401K, defined contribution approach, generally the employer agrees to match (up to a certain limit) the contribution the employee themselves makes to the 401k retirement plan.  These funds are then invested and grow tax deferred to build a retirement nest egg for the employee but the employer's liability is limited to whatever contribution they agree to make during the term of employment of the employee and their liabilities and financial contributions cease with the employee's retirement or termination of employment (the employee can roll over their 401K plan funds from one company to another or into individual retirement vehicles but you should discuss these issues with a financial advisor).

   Answered on July 29, 2014

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