A pension plan within the meaning of Section 401(a) of the Internal Revenue Code, established and maintained by an employer primarily to provide for the payment of benefits to employees over a period of years, usually for life, after retirement. The major requirements are that the plan be in writing, be permanent, be for the exclusive benefit of employees or their beneficiaries, and not be discriminatory in favor of officers, stockholders, supervisors or higher paid employees. A qualified plan (meaning it has been approved by the IRS) will receive favorable tax treatment. Employer contributions constitute a business deduction in determining the employer's taxable income; employer contributions are not regarded as employee earnings and are, therefore, not taxable to the employee; and the earnings of the pension fund are not subject to current income tax.
Pension] a pension plan that includes all provisions deemed essential by the Internal Revenue Service, as set forth in the Internal Revenue Code, for preferential tax treatment regarding contributions, investment income, and distributions