An arrangement under which amounts are paid by the employer into individual accounts held for the benefit of participating employees. These amounts must be calculated by reference to the employer’s profits or paid out of accumulated profits.
Employer contributions are deductible as an expense without limit. Employees must include all contributions to the EPSP on his or her behalf and any investment income earned from that point on in his or her taxable income. In short, the tax treatment of EPSP contributions is the same as if the employer paid the employee an increased salary.
There are no vestingFootenote 1 requirements and vesting rules vary from plan to plan, ranging from immediate vesting to deferred vesting that doesn’t occur until the plan member retires.