Last Updated August 2003

Over the past 125 years, retirement has become a common social phenomenon, and the combined efforts of industry, individual savers, and the Congress have led to a wide and confusing variety of retirement savings vehicles. This guide focuses on retirement plans that are treated more favorably than other forms of saving are under the current income tax regime. It addresses both retirement plans offered by employers or unions and those involving personal saving. Its purpose is threefold: to explain the different tax incentives associated with those plans; to discuss what the government requires of the plans as a condition of their tax-favored status; and to describe how employers and individuals have adapted in response to those tax incentives and the accompanying requirements.

A companion document, entitled Utilization of Tax Incentives for Retirement Saving, profiles participation in retirement plans in 1997, employing data from tax information returns. That paper breaks down rates of participation and average contributions by age group, income class, and marital status/earner role, discussing the patterns that emerge and their implications for public policy.

DISCLAIMER: This guide reviews most retirement savings programs that have associated tax incentives. It is intended to inform discussions of policy, not provide legal or tax advice to help people make personal or business decisions about retirement savings plans. Tax laws and regulations change frequently, and the guide may not have all of the information needed to address individual situations. Readers seeking advice on retirement saving should consult an attorney or other tax professional.

How to Use the Guide

You can use this on-line guide in different ways. For a broad overview of the subject, begin with the jump-off points on this page and follow them to subsequent pages, as your interest dictates. Each page covers a discrete topic. For example, the characteristics of traditional individual retirement accounts (IRAs), Roth IRAs, 401(k) plans, and 403(b) plans are each summarized on a separate page, as are the various requirements (for example, nondiscrimination rules and rules for vesting) that programs must meet to qualify for tax incentives. Use the links on those pages (which appear in bold red type) to navigate between types of plans and the requirements to which they are subject, and vice versa. You will also find links to pages on other relevant topics, such as conversions to cash balance plans or the historical development of IRAs.

Alternatively, for quick information about a single topic, go to the index or to the topical outline. The index lists each topical page in alphabetical order. The topical outline organizes the pages by subject. From either place, you can go directly to the topic that interests you.

To see a brief definition of an unfamiliar term or abbreviation, just place the cursor over the term, and the definition will appear in a second or two in a red box at the top of the screen. Definitions are available for all terms that appear in bold italic blue type. Links in the text that also have definitions are in bold italic red type.

To view footnotes, click on the footnote number, and the text will appear at the bottom of the page. Whenever possible, the sources listed for an entry include hyperlinks so that you can access the sources directly.

To get started, choose from among the following:

• Employment-Based Retirement Plans
  
  
• Individual Retirement Accounts
  
  
• Other Tax Incentives for Personal Saving
  
  
• Topical Outline
  
  
• Index