Employer-Sponsored Retirement Plans

Tax Advantaged Savings for You and Your Employees

Whether you're the plan sponsor of a retirement plan for a large corporation or a small, privately held business, Morgan Stanley can assist you with your retirement plan needs. From Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) business IRA plans to institutional 401(k), 403(b), defined benefit and nonqualified deferred compensation plans, a retirement plan can help you recruit, retain and reward valuable employees while providing your company with significant tax advantages.

At Morgan Stanley, choose from a variety of retirement solutions that include offerings from some of the most respected providers in the industry. Your Financial Advisor can work with you to create a service model that fits your needs, and they can then provide you with a highly flexible investment offering that allows both you and your employees to invest on a tax deferred basis and build, manage and preserve financial assets.

Sponsoring a retirement plan can be extremely time-consuming and complicated. From helping you define your goals to evaluating, selecting, implementing and managing your program, your Financial Advisor can guide you through the steps of creating and maintaining a successful retirement plan, as well as meeting your fiduciary responsibilities as a plan sponsor.

Your Plan Options

Business IRA Plans

Many small business owners have recognized the advantages of qualified retirement plans but have found the costs of complying with complex rules and annual reporting requirements prohibitive. The Morgan Stanley business IRA plans are an easy, low cost alternative to other qualified retirement plans for owners of small businesses.

  • Simplified Employee Pension Plan (SEP). Available for all business types, this retirement plan is fully funded by the employer. It allows employers to make a discretionary contribution, which is allocated to participants based on a formula in the plan document.
  • Savings Incentive Match Plan for Employees (SIMPLE). Available for businesses with up to 100 employees which don't already have a plan, this retirement plan allows employees to make contributions with pretax dollars. Testing requirements are limited, but there are required employer contributions.

Defined Contribution Plans

With these plans, the employee and/or the employer contribute to the employee's individual account. The contributions and earnings are not taxed until distribution, and the value of the account will change based on contributions and the performance of the investments.

  • Profit Sharing. Available for all businesses, this retirement plan is fully funded by the employer. It allows employers to make a discretionary contribution that is allocated to participants based on a formula in the plan document. Some employers may choose a formula that is age-weighted, or tiered. A tiered formula may permit the employer to target contributions to select groups of employees.
  • Money Purchase. Available for all businesses, this retirement plan is fully funded by the employer. It has a required employer contribution that is set in the plan document and is subject to certain funding and other rules. However, most employers will choose the flexibility of a profit sharing plan over a money purchase plan.
  • 401(k). Available for all businesses, this retirement plan allows employees to make contributions with pretax dollars and allows employers to make matching or profit sharing contributions. The 401(k) plan is subject to additional annual testing requirements.
  • 403(b). Available for public schools and certain tax exempt 501(c)(3) organizations, this retirement plan allows employees to make contributions with pre-tax dollars. In some cases, there may also be employer matching or nonelective contributions. The 403(b) plan could be subject to annual testing requirements in certain circumstances.

Defined Benefit Plans

Also known as pension plans, these plans promise the participant a specified monthly benefit at retirement. Available for all businesses, this retirement plan is usually fully funded by the employer. It has required employer contributions that may vary based on the performance of the plan assets.

  • Traditional. The plan may state the promised benefit as an exact dollar amount, or it may calculate a benefit through a plan formula that considers such factors as salary and service.
  • Cash Balance. The benefit amount is computed based on a formula using contribution and earning credits, and each participant has a hypothetical account. Cash balance plans are more likely than traditional defined benefit plans to make lump sum distributions.

Nonqualified Deferred Compensation

These plans are typically offered by larger, privately held and publicly traded corporations. They can allow a select group of key employees to defer income on a pre-tax basis, and may also allow for employer contributions, without the same legal limits associated with 401(k) and other qualified retirement plans. They offer employers a flexible way to reward and retain key employees.

Although these plans are an unfunded promise to pay employees a future benefit, many employers will set aside assets to offset this future liability. These assets are subject to creditors of the business. Unlike a qualified plan, contributions are not deductible to the employer until distribution and employee distributions are not eligible to be rolled over to another tax deferred vehicle.

Tax laws are complex and subject to change. Morgan Stanley, its affiliates and Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not "fiduciaries" (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise agreed to in writing by Morgan Stanley. This material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.


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