Retirement Benefits For Small Businesses

A pension is a regular payment made during a person's retirement from an investment fund from which that person

The legislative history of ERISA can in some ways be traced back to the Revenue Acts of 1921 and 1926, which set tax rules regarding the deductibility of pension contributions and the growth of pension fund's portfolios and thus encouraged pension planning while also establishing some degree of regulation by the IRS (USDOL, 2012). The Revenue Act of 1942 increased regulation and placed stricter requirements on pension plans in order for them to receive these tax benefits, and the Welfare and Pension Plans Disclosure Act of 1959, amended in 1962 brought pensions under he purview of the

As you may know there are two types of pension plans that are most commonly used: a defined contribution plan and a defined benefit plan. “A defined contribution plan sets forth a certain amount that the employer is to contribute to the plan each period (Schroeder, Clark, & Cathey, "Pensions and Other Postretirement Benefits," 2011). “A defined benefit plan specifies the amount of pension benefits to be paid out to plan recipients in the future. Companies that use this plan must make sufficient contributions to the funding agency in order to meet benefit requirements

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

a. i. An employer with a defined-contribution plan pays into the plan either an annual lump-sum per employee or calculates payments based on the employees‟ current wages and or time of service with the firm. Under such a plan, the employer does not guarantee the future amounts employees will receive when they retire. The employees covered by a defined-contribution plan assume the risk for the pension plan‟s financial performance. Under a defined-benefit plan, the employer specifies the size and timing of the payments that the employees will receive when they retire. Typically, these retirement benefits are commensurate with the wages earned by the employee in his or her last few years of employment

The program was intended to provide pensions for most retired commercial and industrial workers aged 65 years or more.

Costa, D. L. (1998). The evolution of retirement: Summary of a research project. The American Economic Review, 88(2), 232-236. Retrieved from https://search.proquest.com/docview/233045640?accountid=41759

Social Security, on average, makes up the largest part of older people 's income (Novak, 2012.) With Social Security making up such a vast portion of retirement income, yet only maintaining 62% (Mendel &, Schram, 2012) of a person’s pre-retirement income, individuals should utilize Individual Retirement Accounts, and Defined Contribution plans combined with Social Security to avoid poverty in old age.

It would make more sense to plan for retirement by putting away funds in a retirement account or a savings account. This could earn interest over the years and make a nice retirement account. Most Americans want to live out the retirement years in the comfort and security of their own homes. Financial planning can turn this into a reality, making it possible for healthy retirees to stay in their home and not have to give up the possessions that they have worked so hard all their lives .

For example, “…other public and private sector retirement plans typically do not begin providing an annuity until age 55, 60, or 65…” The next problem with the current retirement plan is that it is an ‘all or nothing’ system. Either a military member serves 20 years and qualifies for benefits or they do not. This is vastly different from many civilian programs currently offered and something that the Department of Defense (DOD) has attempted to remedy with the newly implemented program. Many civilian-based retirement programs offer vesting programs that enable employees to secure retirement benefits after a certain number of years, usually anywhere from five to 15 years. Another issue with the current military retirement plan is its comparability to the private-sector. As stated by FAS, “…private-sector employers who have reduced or eliminated their reliance on defined benefit programs and have focused almost exclusively on 401(K)-type programs…” Additionally, many private-sector companies offer contribution matching up to a certain percentage, assisting employees in saving for retirement. This is not offered in the current military retirement plan. Having discussed the current retirement program the next topic will be the newly implemented retirement program.

Employers assume responsibility for providing retirement funds in a defined benefits plan. In the plan, a specified amount is set aside for future payments to employees, for life, during retirement. The amount is determine in advance is based on factors such as age, salary, and length of employment. In 2009, the maximum amount to be allotted under the plan was $195,000.

We all are currently aging. We live in an again paradox. But, it is what we choose to do with our time while we have it that counts the most. As a young adult, and before this class I was very unaware of the importance of planning your retirement as early as possible. There are many things that go into planning for a successful retirement. Such as, but not limited to: Where will I choose to live? What will I do to stay mentally active? Or even, when will I choose to retire. In this paper, I will go over a plethora of aspects for my personal plan for aging.

1. In a defined-contribution (DC) pension plan, the employee or employer, or both, make regular contributions to the plan. In the US, employees typically set aside a predetermined percentage of their earnings which is deposited to the plan and the employer will match that contribution. Ultimately, the amount of money available to the individual upon retirement is determined by the performance of their investments. Each employee retains the option to choose how to diversify their investments, while the employer will typically provide a “default allocation” option. The options available are generally very varied, and includes a number of index funds and actively managed mutual funds.

Planning for retirement should not be based on Social Security alone, but rather by saving portions of personal earned wages and putting finances into long-term investments. Depending on Social Security as the only income after retiring is an unsafe and undependable way to prepare for retirement. People who contribute to Social Security are mandatorily putting money into the Social Security Reserve; this money is used for older generations that will file for these benefits before the younger people working, in the early 21 century, ever receive a chance. Money controlled by other’s hands will never be a guarantee for a secure future, yet money saved by an individual to put toward personal goals will reward greatly. By taking the time to

Unlike the old days where a retiree could rest assured that they could live out the rest of their life on their pension and social security checks, the retirees of today receive their pensions paid out in a lump sum that takes the place of the pension check, but encompasses the total amount a retiree has to live on until they pass away. This creates uncertainty in the amount a retiree can spend per month, and if the total amount is sufficient to last them until they pass away. Immediate annuities help to create certainty in the financial situation of retirees. While retirees can be certain that they will receive a social security check each month, the amount of income they