The 5 Most Common Retirement Benefits

Traditional pension and 401(k) participation picked up in 2010. There was a net gain of 53 pension plans and 5,207 401(k) and profit-sharing plans in fiscal year 2010, according to recently released Internal Revenue Service data. Over 1 million more people gained the ability to participate in a 401(k) last year when 6,747 new 401(k) and profit-sharing plans were created. However, 116,619 individuals lost the ability to defer taxes on their retirement savings at work when 1,540 401(k) plans were terminated. Here’s a look at the most popular types of retirement benefits in 2010.

[See 10 Ways to Boost Your Social Security Checks.]

Profit-sharing plans. Profit-sharing plans in which company contributions to the retirement account are calculated as a percentage of company profits are the most popular form of retirement benefit. There were 6,442 new retirement accounts created between Oct. 1, 2009 and Sept. 30, 2010 that give 587,455 employees a share of the profits of the company, according to an IRS analysis of 230 million individual and corporate tax returns that collected $2.3 trillion in revenue. However, 85,139 people lost their ability to capture a portion of company revenue when 1,262 plans were terminated last year. Overall, there were 30,860 profit-sharing plans in 2010.

Pension plan. There are still 4,262 traditional pension plans that promise long-term employees guaranteed payments for the rest of their lives in retirement. There were 1,176 new pension plans covering 483,455 workers created in 2010, while 1,123 pension plans with 74,346 participants ended last year.

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Fixed company contributions. There are 1,494 401(k) plans in which the company contributes a specific percentage of a worker’s pay to the retirement account, regardless of how the company performs. Some 181 new plans of this type were created, giving 186,752 people the ability to receive a tax-deferred percentage of pay from their employer. However, 612 plans of this type covering 9,959 people ended.

Employee stock ownership plan. Sometimes firms contribute shares from the company’s treasury or cash to purchase outstanding shares of company stock to employee accounts using an employee stock ownership plan (ESOP). Some 37 new non-leveraged ESOPs covering 270,680 employees were formed last year, but 78 ESOPs with 14,275 participants ended. The IRS determined that there are now 294 ESOP plans.

[See How to Save for Retirement Without a 401(k).]

Stock bonus plans. There were 36 stock bonus retirement plans that are funded by an employer’s contribution of corporate stock last year. Stock bonus plans now have fewer participants than they did in 2009. Some 657 workers lost the ability to benefit from this type of plan in 2010, while 282 people became newly eligible.

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