Compensation Glossary

Thrift Plans

A retirement account in which a worker and an employer each make contributions up to a certain limit, usually on a before-tax basis. Under a thrift plan, a worker places a portion of their pre-tax income into an account and allows it to be invested. Taxation is deferred until withdrawal from the account, generally after their retirement. It is important to note that unlike some retirement plans, the employer makes a defined contribution (usually a match to all or a portion of the employee’s contributions) to the account as well. Thrift plans are employee benefits, and workers must have a sponsoring employer to take advantage of one.