Retirement Plans And Retirement Plan Essay

Retirement Plans And Retirement Plan Essay

Length: 1900 words (5.4 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Retirement Plans
Plans are generally separated into two categories; defined benefit plans and defined contribution plans. Defined benefit plans include pensions. This type of plan guarantees a given amount of monthly income, less portability, and shifts the investment risk to the employer. Defined contribution plans such as a 401(k) allows the individual to choose investments. This puts the risk on the employee and does not guarantee any minimum or maximum benefits. 401(k)s are also very portable and vesting is almost immediate. 401(k)s have gained in popularity and most companies are switching to 401(k)s from a pension plan. A new plan has emerged which is being seen as the ideal retirement plan. This new type of plan is a hybrid of the two and offers the best features from each of the plans and is called a cash balance pension plan. Those who are not offered any type of retirement plan can get IRA’s which are available to everyone.
Both 401(k) and pension plans are qualified plans, this means, the plan is governed by the regulations in the Employee Retirement Income Security Act of 1974 and the tax code. This also means that agency matching is not required even though most so match. Matching is generally done up to a certain percent or under a profit-sharing feature.
Pensions are considered the traditional retirement plan. Companies large and small are moving away from this type of plan due to the risks and costs that the employer must burden. This lessens the risk to the employee while guaranteeing that they will have a specific income after retirement that may increase due to cost of living and inflation.
Even when popular pensions were not offered by every company and only 4 out of 10 people had pensions. P...

... middle of paper ...

...n limits of a pension plan with the flexibility and portability of a 401(k). The labor department describes it as a promised benefit in terms of a stated balance account.
The downside of the cash balance pension plan is that investments would be decided by the company or plan trustees which would give less control to the individual. While this plan may benefit most of its participants a company switching from a pension plan may be harmful to long time contributors to those pensions. Traditional pension plans us an average high pay to determine distribution amount. The cash balance plan contributions are at the same rate but the money is allowed to build interest over time. This benefits younger workers but hurts older workers where their money has not had time to build interest.
This plan is still fairly new and is not yet verified to be a successful plan.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Retirement Plan For Retirement Plans Essay

- A pension plan is a type of retirement plan gives month to month pay in retirement. Normally governments offer annuity arrangements, and some substantial organizations offer them. With a benefits plan, the business contributes cash to the annuity arrange while one is working. The cash will be paid to you, normally as a month to month check in retirement, after you achieve a predetermined retirement age. An equation decides how much benefits salary you will receive once you are retired. The formula a pension depends on: years of service with the company offering the pension, age and compensation....   [tags: Pension, Retirement, Life annuity]

Better Essays
1454 words (4.2 pages)

Retirement Plan For Retirement Plans Essay

- Envision sitting in a rocking chair and having an” idle” lifestyle or idle time. When one reaches the age of 55, it is time to consider retirement planning. Determining a future lifestyle change means making plans or preparation for this life adjustment. A little retirement planning now can make a huge difference later and should not be put off. Retirement is a strategy for the future and a vision of the future. Retirement begins with reviewing the financial assets and understands what withdrawing from work means and the impact to family and friends....   [tags: Pension, Retirement, North Carolina, Pension fund]

Better Essays
1077 words (3.1 pages)

Essay about Preparing For Early Retirement Plans

- A lot of people would like nothing better than to be able to retire early. But early retirement presents special challenges. When preparing for early retirement it’s important to do some contingency planning. There are at least four threats to your early retirement plans - but more important – is knowing what to do about them. 1. Outliving Your Money This may be the single biggest threat to early retirement planning. In recent decades, as life spans have increased, people retiring at 65 have had to deal with the prospect of providing for themselves for the next 20, 25, or even 30 years....   [tags: Investment, Stock market, Inflation, Retirement]

Better Essays
1140 words (3.3 pages)

U.S. Taxation of Qualified Retirement Plans Essay

- Introduction In general, the income taxation rules of pension plans in a domestic and international context and the payors withholding and reporting obligations upon pension distributions are complex. The complexity arises due to a disparity and confusion between the rules adopted by Congress in the Internal Revenue Code and treaties negotiated by the Treasury Department. The purpose of this paper if to briefly describe the rules governing taxation of distribution from qualified retirement plans in a domestic and international context....   [tags: international, pension, beneficiaries ]

Better Essays
1141 words (3.3 pages)

Speech: IRA Retirement Plans

- Speech: IRA Retirement Plans Saving for Retirement General Purpose: My general purpose is to persuade. Specific Purpose: My specific purpose is to persuade the audience to start saving for their retirement instead of simply relying on Social Security. Thematic Statement: Starting to save for retirement early has many benefits over Social Security. Introduction of Speech I. I took a survey of thirty BSU students, who are employed, to determine how many of them have started saving for their retirement....   [tags: Papers]

Better Essays
933 words (2.7 pages)

Pension Types and Benefit Plans in the United States Essay

- Introduction In the United States, public sector pensions are offered by federal, state and local levels of government and are available to most public sector employees. The promise of a pension on retirement is a significant part of government compensation. Public pensions have long been advertised as offering generous, guaranteed benefits for public employees while collecting low and stable contributions from taxpayers (Biggs 2013). The employer contributions to these plans may vest either immediately or after a certain number of years of service and can then be withdrawn or rolled over to another retirement plan if the employee leaves the company....   [tags: Retirement, Crisis, Solutions]

Better Essays
1878 words (5.4 pages)

Essay about The Retirement Era Of Retirement

- I thought long and hard about writing this piece, its not a story that many investment advisors want to share. Its not a feel-good story. Retirement is a relatively new idea, for most of mankind 's history, if you were alive you worked. Even the wealthy worked managing their estates. That all changed in 1881 when Otto von Bismarck, the conservative minister president of Prussia proposed government-run financial support for older members of society. It then took eight years for the German government to approve a plan which provided support for those who were over the age of 70....   [tags: Pension, Retirement, Investment]

Better Essays
1574 words (4.5 pages)

Essay about The Retirement Boom Of Retirement

- Countless seniors perceive retirement as just a step away from never working again; other seniors are already there. Worldwide, our senior populations will exceed the younger generations; the retirement boom exists among us. What answers do we work towards in handling this large number of retirees. The first baby boomers were due for retirement in 2008, this means 77 million boomers now receive their Social Security benefits and receive a pension (Moschis and Burkhalter, 235). However, a large number of these retired seniors are returning to the workforce, simply not retiring at all....   [tags: Retirement, Pension, Old age, Ageing]

Better Essays
1061 words (3 pages)

401(k) Plans Essay

- 401(k) Plans      There are many economic issues facing the nation today. While some are extremely important in determining how the economy is balanced, others are not. Although this is true, that does not necessarily make these lesser important issues obsolete. Take, for example, the recent issue of corporate leaders matching contributors to the 401(k) plan with company stock, instead of with cash. Though this is a relatively National issue, it still greatly affects a large number of people in foreign areas as well as you and me....   [tags: Finance Financial Money Retirement Essays]

Free Essays
824 words (2.4 pages)

Essay about Working Into Retirement

- After the attacks of September 11, 2001 more than 40 percent of the FBI agents around the world had five or less years of experience on the job. The agency was partially to blame because of its policy of mandatory retirement at age 57. This caused what was described as a "brain drain" because so many of the more experience analysts were gone. The solution was to hire back the retirees as consultants and classify them as temporary employees so as not to affect their pensions. The problem is not unique to the FBI and seems stem from society's obsession with youth....   [tags: Labor Force Workforce Retirement]

Free Essays
813 words (2.3 pages)