### Question
How is the term employment retention plan defined?


### Answer
The term **employment retention plan** is defined in *26 U.S.C. § 457* as the following:

> a plan to pay, upon termination of employment, compensation to an employee of a local educational agency or education association described in subparagraph (C) for purposes of—


(i) retaining the services of the employee, or


(ii) rewarding such employee for the employee's service with 1 or more such agencies or associations

#### Citation:
  - *26 U.S.C. § 457*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart B-Taxable Year for Which Items of Gross Income Included**

