Retirement Plan Proposal
Retirement Plan Proposal and Communication Plan
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Retirement Plan Proposal and Communication Plan
The Employment Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans. It was established to regulate the implementation of employee benefits, such as medical and disability programs (Martocchio, 2009). With federal laws like this in place, it is very imperative that every organization offer a variety of retirement plans to their employees. A retirement savings is an essential part for future financial security (Department of Labor, 2015). The primary function of providing retirement plans to employees is to assure that employees are protected during periods extending their employment with the organization.
Types of Retirement Plans There are three retirement plans that employees can choose from, which are the defined benefit plan, the defined contribution plan, and the hybrid plan. Each retirement plan is designed to help employees contribute towards their retirement. The first retirement plan is a defined benefit plan. The defined benefit plan guarantees retirement benefits based on a fixed formula. This type of benefit is usually expressed in terms of a monthly sum equal to percentage of a participant’s preretirement pay multiplied by the number of years the employee has worked for the organization (Martocchio, 2009).
The next type of retirement plan is the defined contribution plan. Employers and employees make annual contributions to separate accounts established for each participating employee based on a formula (Martocchio, 2009). There is a variety of defined contribution plans. Some of these plans include Section 401(k) Plans, profit sharing plans, stock bonus plans, and savings incentive match plans for employees (SIMPLEs). A section 401(k) is a retirement plan that employees can defer a portion of their
Student Name
Course Number
Date
Instructor Name
Retirement Plan Proposal and Communication Plan
The Employment Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans. It was established to regulate the implementation of employee benefits, such as medical and disability programs (Martocchio, 2009). With federal laws like this in place, it is very imperative that every organization offer a variety of retirement plans to their employees. A retirement savings is an essential part for future financial security (Department of Labor, 2015). The primary function of providing retirement plans to employees is to assure that employees are protected during periods extending their employment with the organization.
Types of Retirement Plans There are three retirement plans that employees can choose from, which are the defined benefit plan, the defined contribution plan, and the hybrid plan. Each retirement plan is designed to help employees contribute towards their retirement. The first retirement plan is a defined benefit plan. The defined benefit plan guarantees retirement benefits based on a fixed formula. This type of benefit is usually expressed in terms of a monthly sum equal to percentage of a participant’s preretirement pay multiplied by the number of years the employee has worked for the organization (Martocchio, 2009).
The next type of retirement plan is the defined contribution plan. Employers and employees make annual contributions to separate accounts established for each participating employee based on a formula (Martocchio, 2009). There is a variety of defined contribution plans. Some of these plans include Section 401(k) Plans, profit sharing plans, stock bonus plans, and savings incentive match plans for employees (SIMPLEs). A section 401(k) is a retirement plan that employees can defer a portion of their
References: Martocchio, J. J. (2009). Strategic Compensation (5th ed.). Retrieved from ecampus.phoenix.edu. United States Department of Labor. (2015). Retrieved from http://www.dol.gov/ Hybrid Retirement Plans. (1996, March). Employee Benefit Research Institute. Retrieved from http://www.ebri.org