The Most Popular Pension Plan: Revealing the Top Choice for Retirement Savings

Choose the pension plan you think is the most popular!

Author: Gregor Krambs
Updated on Apr 17, 2024 07:25
Welcome to StrawPoll, your go-to platform for determining the best of the best! Today, we bring you a crucial ranking that affects each one of us in the long run – "What is the most popular pension plan?" With an array of pension plans out there, it's time to settle the debate and find out which one reigns supreme. We've curated a list of top contenders, but if you think there's a hidden gem we missed out on, feel free to suggest it! So gear up, flex those voting muscles, and make your voice heard. It's not just about financial security; it's about making informed choices for a brighter future. Cast your vote now and uncover the ultimate pension plan champion!

What Is the Most Popular Pension Plan?

  1. 1
    65
    votes
    The 401(k) plan is a defined contribution plan that allows employees to save for retirement by making pre-tax contributions to their account, and it is popular because of its tax advantages and employer contributions.
    The 401(k) Plan is a common retirement savings plan available to employees in the United States. It allows individuals to save and invest a portion of their pre-tax income for retirement.
    • Contribution Limits: For 2021, the annual contribution limit is $19,500. Employees aged 50 and above can make an additional catch-up contribution of $6,500.
    • Employer Matching: Many employers offer matching contributions, matching a certain percentage of the employee's contributions.
    • Vestment: Employees become fully vested in their own contributions immediately. Employer contributions may have a vesting schedule.
    • Investment Options: Participants can typically choose from various investment options such as mutual funds, stocks, bonds, and target-date funds.
    • Portability: When changing jobs, employees can usually roll over their 401(k) funds into a new employer's plan or into an individual retirement account (IRA).
  2. 2
    31
    votes
    An IRA is a tax-advantaged investment account that allows individuals to save for retirement. It is popular because it offers tax benefits and flexibility in investment options.
    An Individual Retirement Account (IRA) is a tax-advantaged investment account designed to help individuals save for retirement. It allows individuals to set aside a portion of their income on a tax-deferred or tax-free basis, depending on the type of IRA. Contributions and investment earnings grow tax-free until withdrawals begin after age 59½, at which point they are taxed as ordinary income. IRAs offer a wide range of investment options, including stocks, bonds, mutual funds, and more.
    • Types: Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA
    • Contributions: Annual contribution limit in 2021: $6,000 or $7,000 for individuals aged 50 or older
    • Tax Advantages: Traditional IRA: Tax-deferred contributions and tax-deductible in some cases; Roth IRA: After-tax contributions and tax-free qualified withdrawals
    • Withdrawal Rules: Withdrawals before age 59½ may incur early withdrawal penalties; Required Minimum Distributions (RMDs) generally start at age 72 for traditional IRAs
    • Income Limitations: Roth IRA contributions are subject to income restrictions
  3. 3
    28
    votes
    A pension plan is a defined benefit plan that provides retirement benefits to employees. It is popular because it provides a guaranteed income stream for life.
    A pension plan is a retirement savings plan that provides a source of income for individuals during their retirement years. It is designed to help individuals save and invest money over the course of their working years to accumulate a fund that can be used to support their living expenses after retirement.
    • Types of Pension Plans: Defined Benefit, Defined Contribution, Hybrid, Individual Retirement Accounts (IRAs), 401(k) Plans
    • Employer and Employee Contributions: Often, both employers and employees contribute to the pension plan.
    • Tax Advantages: Pension plans often offer tax advantages, such as tax-deferred growth on contributions and tax-free withdrawals during retirement.
    • Vesting: Vesting refers to the process by which employees become entitled to the contributions made by their employers to the pension plan. Vesting can be immediate or gradual over a specific period of employment.
    • Portability: Some pension plans provide portability, allowing employees to transfer their pension benefits if they change jobs.
  4. 4
    10
    votes
    A SEP plan is a retirement plan for self-employed individuals or small business owners. It is popular because of its simplicity and tax benefits.
    The Simplified Employee Pension Plan (SEP) is a type of retirement savings plan designed for small businesses and self-employed individuals. It allows employers to make tax-deductible contributions to retirement accounts on behalf of their employees, while also providing a retirement savings opportunity for business owners themselves.
    • Eligibility: Available to any employer, regardless of size - including self-employed individuals.
    • Employee Inclusion: Must cover all employees aged 21 and older who have worked for the employer for at least three of the last five years, earning a minimum of $600 annually.
    • Contribution Limits: Up to 25% of an eligible employee's compensation or $58,000 (2021 limit), whichever is less.
    • Tax Benefits: Contributions are tax-deductible for the employer and tax-deferred for employees until retirement.
    • Simplicity: Easy to set up and maintain with minimal administrative responsibilities and paperwork.
  5. 5
    14
    votes
    A Roth IRA is a type of Individual Retirement Account that allows investors to contribute after-tax dollars and withdraw funds tax-free in retirement. It is popular because of its tax-free withdrawal options in retirement.
    A Roth IRA is a type of Individual Retirement Account (IRA) that allows individuals to save for retirement with after-tax dollars and withdraw the funds tax-free at retirement age.
    • Contributions: Contributions to a Roth IRA are not tax-deductible.
    • Income Limit: There is an income limit for eligibility to contribute to a Roth IRA.
    • Tax-Free Growth: Roth IRA funds can grow tax-free, meaning investors don't have to pay capital gains tax on the growth.
    • No Mandatory Withdrawals: Roth IRAs do not have required minimum distributions (RMDs) during the owner's lifetime.
    • Early Withdrawal Penalties: Withdrawals of earnings before age 59½ may be subject to taxes and penalties.
    Roth IRA in other rankings
  6. 6
    15
    votes
    A defined benefit plan is a type of pension plan that provides a predetermined retirement benefit based on salary and years of service. It is popular because it provides a guaranteed income stream in retirement.
    A Defined Benefit Plan is a type of pension plan where the employer guarantees a specific retirement benefit amount to its employees upon their retirement. The benefit is typically based on a formula that considers factors such as salary history, years of service, and age at retirement.
    • Benefit Amount: Guaranteed retirement benefit amount
    • Formula: Calculated based on factors like salary history, years of service, and age at retirement
    • Employer Responsibility: Employer bears the investment and longevity risks
    • Funding: Employer contribution, often supplemented by employee contribution
    • Investment Management: Managed by the employer or a fund designated by the employer
  7. 7
    10
    votes

    Cash Balance Plan

    American Benefits Consulting
    A cash balance plan is a type of pension plan that combines features of both defined benefit and defined contribution plans. It is popular because it provides a guaranteed income stream and flexibility in investment options.
    A Cash Balance Plan is a type of pension plan that combines elements of both defined benefit and defined contribution plans. It establishes a hypothetical account balance for each employee, which grows with annual contributions and interest credits. The account balance, similar to a 401(k), can be converted into a lump sum or annuity upon retirement. Unlike traditional pensions, Cash Balance Plans provide individual account transparency and portability.
    • Hybrid Plan: Combines elements of defined benefit and defined contribution plans
    • Hypothetical Account Balance: Establishes individual account balance for each employee
    • Annual Contributions: Contribution made by employer into each employee's account annually
    • Interest Credits: Interest added to each employee's account balance based on a predetermined rate
    • Lump Sum or Annuity: Account balance can be converted into a lump sum or annuity upon retirement
  8. 8
    0
    votes
    The TSP is a retirement savings plan for federal employees and members of the uniformed services. It is popular because of its low fees and investment options.
    The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services. It was established by the Federal Employees' Retirement System Act of 1986.
    • Contributors: Federal employees and members of the uniformed services
    • Employee Contributions: Contributions can be made on a pre-tax or Roth basis, subject to annual limits
    • Employer Contributions: Matching contributions for eligible participants up to a certain percentage of their salary
    • Investment Options: Offers a range of investment funds including government securities, bonds, and stocks
    • Tax Advantages: Contributions are tax-deferred, potentially lowering taxable income
    Thrift Savings Plan (TSP) in other rankings
  9. 9
    11
    votes

    Simplified Pension Plan (SIMPLE)

    Internal Revenue Service (IRS)
    A SIMPLE plan is a retirement plan for small businesses with less than 100 employees. It is popular because of its simplicity and low administrative costs.
    The Simplified Pension Plan (SIMPLE) is a retirement plan designed for small businesses and self-employed individuals. It was created to provide an affordable and straightforward option to offer retirement benefits to employees.
    • Eligibility: Available to businesses with 100 or fewer employees who received at least $5,000 in compensation in the preceding year.
    • Employee Contribution: Employees can contribute a portion of their salary on a pre-tax basis, with the maximum annual contribution set by the IRS.
    • Employer Contribution: Employers must either match their employees' contributions dollar for dollar, up to 3% of the employee's compensation, or make a non-elective contribution of 2% of each eligible employee's compensation.
    • Vesting Period: Immediate vesting for all employee and employer contributions.
    • Withdrawal Options: Withdrawals are subject to ordinary income tax and a 10% penalty if taken before reaching the age of 59 ½.
  10. 10
    9
    votes
    An ESOP is a retirement plan that invests primarily in the employer's stock. It is popular because it provides employees with a stake in the company's success and can provide tax benefits to the employer.
    The Employee Stock Ownership Plan (ESOP) is a pension plan that allows employees of a company to become owners by investing in company stocks. It provides employees with a stake in the company's success and a source of retirement income.
    • Ownership: Allows employees to become owners of the company through stock ownership.
    • Retirement Income: Provides a source of retirement income for employees.
    • Tax Benefits: Offers tax advantages for both employees and employers.
    • Employee Participation: Employees have a say in the company's decision-making process.
    • Employee Motivation: Increases employee dedication and motivation by aligning their interests with company success.

Missing your favorite pension plan?

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Discussion

Ranking factors for popular pension plan

  1. Investment options
    A good pension plan should offer a variety of investment options, such as stocks, bonds, and money market funds, to enable participants to diversify their portfolios according to their risk tolerance and investment objectives.
  2. Fees and expenses
    The fees associated with a pension plan can significantly impact the overall returns. Therefore, it's essential to consider the administrative, management, and transaction fees charged by the plan provider.
  3. Vesting period
    Some pension plans have vesting periods, during which you don't fully own your employer's contributions until a certain number of years have elapsed. A shorter vesting period could be a crucial factor when evaluating a pension plan.
  4. Historical performance
    While past performance is not a guarantee of future returns, analyzing historical returns can provide valuable insight into the plan's overall performance and help assess its reliability.
  5. Flexibility
    A good pension plan should offer flexibility in terms of contribution rates, investment options, and withdrawal options. Participants may want to adjust their contributions or investments based on their changing financial needs, and having options available is key.
  6. Access to financial education and advice
    Participants should have access to educational resources, tools, and professional advice to help them make informed decisions about their investments and retirement planning.
  7. Portability
    Check if the pension plan is portable, meaning you can transfer it to another employer or keep it in the event you change jobs. This factor ensures that your retirement savings remain intact as you move through different stages of your career.
  8. Payout options
    Consider the various payout options available, such as lump-sum payments, regular annuities, or phased withdrawals, since they can affect your retirement income and related taxes.
  9. Reputation and financial stability of the plan provider
    When joining a pension plan, it's essential to verify the track record and financial stability of the plan provider to ensure that your retirement savings will be adequately managed.

About this ranking

This is a community-based ranking of the most popular pension plan. We do our best to provide fair voting, but it is not intended to be exhaustive. So if you notice something or pension is missing, feel free to help improve the ranking!

Statistics

  • 2017 views
  • 193 votes
  • 10 ranked items

Voting Rules

A participant may cast an up or down vote for each pension once every 24 hours. The rank of each pension is then calculated from the weighted sum of all up and down votes.

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More information on most popular pension plan

Pension plans have become an essential part of retirement planning for many individuals in today's world. With the increased life expectancy and changing economic conditions, it has become essential to have a solid pension plan to ensure a secure future. There are various types of pension plans available in the market, including defined benefit plans, defined contribution plans, and hybrid plans. Defined benefit plans offer a fixed payout based on the employee's salary and years of service, whereas defined contribution plans provide a retirement savings account that employees can invest in. Hybrid plans are a combination of both. Each pension plan has its unique features, advantages, and disadvantages. It's essential to research and evaluate the different options available and choose the one that best suits your retirement needs. At StrawPoll, we have conducted numerous polls and rankings to determine the most popular pension plans among our users. Stay tuned to find out which pension plans are the most preferred by our audience.

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