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Simple English definitions for legal terms
government plan
Read a random definition: racket
A quick definition of government plan:
A government plan is a type of employee benefit plan that is established by the federal government, state or local governments, or their agencies or instrumentalities. It provides benefits to employees, officers, and advisers of a company, such as pensions, savings, stock options, and profit-sharing. The plan can be a combination of employee-welfare benefit plan and employee-pension benefit plan. However, it excludes any plan, fund, or program in which no employees are plan participants. There are different types of government plans, such as 401(k) plan, 403(b) plan, and 457 plan.A more thorough explanation:
A government plan is a type of employee benefit plan that is established and maintained by the federal government, state or local governments, or their agencies or instrumentalities for their employees. It can include a variety of plans such as pension plans, profit-sharing plans, and welfare plans.
- 401(k) plan: A retirement and savings plan that allows an employee to elect to have a portion of their pretax salary contributed to a defined contribution plan. Employers often match all or part of the employee's contributions.
- 403(b) plan: A retirement plan for employees of public educational systems and certain tax-exempt organizations that is funded by pretax employee contributions much like a 401(k) plan, but may also provide for employer contributions.
- Governmental plan: An employee benefit plan established or maintained for its employees by the federal government, state or local governments, or their agencies or instrumentalities.
These examples illustrate how a government plan can take different forms and provide various benefits to employees. For instance, a 401(k) plan allows employees to save for retirement with the help of their employer's contributions, while a 403(b) plan is designed for employees of certain organizations. A governmental plan is established by the government for its employees and can include different types of plans.