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September 9, 2011 This is an incomplete listing of companies that have notified the Revenue Department that their pension plans qualify as a defined benefit plan. For tax years beginning January 1,.

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Defined benefit plans provide a fixed, pre-established benefit for employees at retirement. Employees often value the fixed benefit provided by this type of plan. On the employer side, businesses can generally contribute (and therefore deduct) more each year than in defined contribution plans.

A defined benefit plan promises a specified monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement.

IRA and 401(k) distributions in retirement: Taxed in Alabama Even though traditional pension benefits aren't subject to tax in Alabama, amounts paid through IRAs and employer-sponsored defined-contribution retirement plans such as 401(k) plan accounts are included in taxable income for Alabama income tax purposes.

A pension benefit formula that determines the benefit by multiplying a certain percentage (up to 2%) of the average earnings by the years of service (i.e. monthly pension = 1.5% x average monthly earnings x years of service). For example, assume that the employee earned an average of $30,000 per year during his career.

Defined Benefit Plans generally require the employer to make annual contributions. The amount required is equal to the value of benefit increases for the year plus a 15-year amortization of any unfunded liabilities.

The advantages of defined benefit plans are fixed payout, protection from market fluctuations, tax benefits, and increased employee retention. The disadvantages include the limited potential for growth of investments, vesting period, and employer cost.

This defined benefit program provides retired employees with a specific benefit payable monthly for the lifetime of the member. Upon service retirement, employees are also eligible to join the state's Public Education Employee Health Insurance Plan (PEEHIP). Rates for this plan vary based on years of TRS service.

(4) Benefits received from defined benefit plans including benefits received from nonqualified defined benefit plans such as excess benefit plans or supplemental executive retirement income plans (SERP's) are exempt from Alabama income tax to the extent that the benefits are taxable for federal income tax purposes.

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© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232
Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232