The adoption of 401(k) plans by a state or local government or a tax-exempt organization is limited by law.

Q: What are profit sharing plans or stock bonus plans?

A profit sharing or stock bonus plan is a defined contribution plan under which the plan may provide, or the employer may determine, annually, how much will be contributed to the plan (out of profits or otherwise).  The plan contains a formula for allocating to each participant a portion of each annual contribution.  A profit sharing plan or stock bonus plan may include a 401(k) plan.

Q: What are employee stock ownership plans (ESOPs)?

Employee stock ownership plans (ESOPs) are a form of defined contribution plan in which the investments are primarily in employer stock.  Congress authorized the creation of ESOPs as one method of encouraging employee participation in corporate ownership.

Q: What information is your pension plan required to disclose?

The Employee Retirement Income Security Act (ERISA) requires plan administrators - the people who run plans - to give you in writing the most important facts you need to know about your pension plan.  Some of these facts must be provided to you regularly and automatically by the plan administrator.  Others are available upon request, free of charge or for copying fees.  Your request should be made in writing.

One of the most important documents you are entitled to receive automatically when you become a participant of an ERISA-covered pension plan or a beneficiary receiving benefits under such a plan, is a summary of the plan, called the summary plan description or SPD.  Your plan administrator is legally obligated to provide to you, free of charge, the SPD.  The SPD is an important document that tells you what the plan provides and how it operates.  It tells you when you begin to participate in the plan, how your service and benefits are calculated, when your benefit becomes vested, when you will receive payment and in what form, and how to file a claim for benefits.  You should read your SPD to learn about the particular provisions that apply to you.  If a plan is changed you must be informed, either through a revised SPD, or in a separate document, called a summary of material modifications, which also must be given to you free of charge.