Hrm 324 Week 4 Retirement and Communication Plan
Proposed Retirement Plan
Marlena Hedine
HRM/324
Aug 27, 2013
Proposed Retirement and Communication Plan
An organization can offer several different types of retirement plans to their employees. There are two types of plans that are most often used such as the Defined Contribution Plan and the Hybrid Plans. The Define Contribution plans are beneficial not only to employees retirement needs but also beneficial to the company at the same time. Section 401(k) plans, Employee Stock Ownership Plans (ESOPs), Profit Sharing Plans, and Stock Bonus Plans. On the other broad of the spectrum we have the Hybrid Plan or the Cash Balance Plans, which may also be offered to employees.
This proposal will mostly be talking about the Define Contribution Plan and what it can offer employees. This plan is a guaranteed retirement plan for employees based on the number of years they have been employed by the organization. This plan is calculated by the monthly percentage of the employee preretirement pay and then multiplied by the number of years that the employee has served with in the organization. The Define Contribution Plan may be a fixed rate but it is calculated in two ways, a flat benefit or a unit benefit formula. The Flat Benefit formula is calculated with a fix dollar amount or a dollar amount that is based on the employee compensation. An example would be in 2010 Deborah plans on retiring and her final average salary in the 3-year period preceding retirement was 60,000 this is based on 59,000 in 2007, 60,000 in 2008, and 61,000 in 2009. We would then add 59,000 + 60,000 + 61,000 and divide by three and that equals 60,000 in a three-year time. We can then assume that the benefits Deborah will receive is at 50%. Deborah will be receiving a yearly retirement compensation of $30,000 from her retirement plan. Flat Benefit Formula is calculated with a fix dollar amount or a dollar amount
Marlena Hedine
HRM/324
Aug 27, 2013
Proposed Retirement and Communication Plan
An organization can offer several different types of retirement plans to their employees. There are two types of plans that are most often used such as the Defined Contribution Plan and the Hybrid Plans. The Define Contribution plans are beneficial not only to employees retirement needs but also beneficial to the company at the same time. Section 401(k) plans, Employee Stock Ownership Plans (ESOPs), Profit Sharing Plans, and Stock Bonus Plans. On the other broad of the spectrum we have the Hybrid Plan or the Cash Balance Plans, which may also be offered to employees.
This proposal will mostly be talking about the Define Contribution Plan and what it can offer employees. This plan is a guaranteed retirement plan for employees based on the number of years they have been employed by the organization. This plan is calculated by the monthly percentage of the employee preretirement pay and then multiplied by the number of years that the employee has served with in the organization. The Define Contribution Plan may be a fixed rate but it is calculated in two ways, a flat benefit or a unit benefit formula. The Flat Benefit formula is calculated with a fix dollar amount or a dollar amount that is based on the employee compensation. An example would be in 2010 Deborah plans on retiring and her final average salary in the 3-year period preceding retirement was 60,000 this is based on 59,000 in 2007, 60,000 in 2008, and 61,000 in 2009. We would then add 59,000 + 60,000 + 61,000 and divide by three and that equals 60,000 in a three-year time. We can then assume that the benefits Deborah will receive is at 50%. Deborah will be receiving a yearly retirement compensation of $30,000 from her retirement plan. Flat Benefit Formula is calculated with a fix dollar amount or a dollar amount
References: How an Employee Stock Ownership Plan (ESOP) Works http://www.nceo.org/articles/esop-employee-stock-ownership-plan J. Martocchio, Strategic Compensation: A Human Resource Management Approach, retrieve on August 25,2013 Congressional Research Service Summary of the Employee Retirement Income Security Act (ERISA), www.agingsenate.gov IRC 401(k) Plans - Establishing a 401(k) Plan, www.IRS.gov