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Employers establish qualified retirement plans to aid employee savings, which are essential for retirement. These plans offer tax benefits to employers for their contributions, and employees can also defer part of their salaries to lower their taxable incomes. There are two main types of qualified plans: defined benefit and defined contribution. A defined benefit plan, typically less common now, guarantees employees a payout upon retirement, funded and managed by the employer, such as pensions. In contrast, defined contribution plans, more widely used today, are funded by employee salary contributions, often with employer matching. However, employees assume investment risks, with payouts depending on performance. Both plans assist in reducing taxable income.