IBEW 265 Careers
Dignity. Respect. Brotherhood.
When you are young you may not think about retirement, but eventually age catches up with us all. Will you have enough to retire? Is your employer's match dependent on how much you can afford to put aside? Many of us working in construction don't have a significant amount of extra income to invest. Employers count on that fact, so it's a cheaper investment for them.
​
401(k) vs. Pension Plan: What’s the Difference?
​
A 401(k) and a pension are both employer-sponsored retirement plans that promise tax advantages as well as future financial security. Both are methods of funding employees' retirement costs with real tax savings for participants.
​​
401(k)
​
​
-
A 401(k) and its cousins accumulate cash until the employee retires and takes responsibility for managing the account.
-
A 401(k) is classified as a defined contribution
-
A defined contribution plan allows employees and employers (if they choose) to contribute funds regularly to a long-term account. The employee chooses how to invest the money from a selection provided by the employer. Both the employer and the employee get tax breaks on their contributions. When the employee retires, the total amount in the account is theirs.
-
Employee bears all the investment risk.
Pension Plan
​
​
-
A pension guarantees the retiree a set payment for life.
-
A defined benefit plan also grows over the years with contributions from the employer and employee. The employer generally pools all contributions to be professionally invested and managed. After retiring, the employee will receive a set payment from this fund for life. The payment is based on factors such as length of service and final salary.
-
Employer bears all the investment risk.
-
Pensions are insured by the Pension Benefit Guaranty Corporation.