Retirement Income Plans

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TORY BENEFITS The Social Security Act of 1935, with its later amendments, established a system of providing old age, survivor's, disability, and retirement benefits [EEOC, 2005], which the Social Security Administration administers. Furthermore, the act is to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue; and for other purposes (Social Security Administration, 1935). For 2005, social security is supported by a tax of 15.3 percent on income up to $90,000. If your net earnings exceed $90,000, you continue to pay only the Medicare portion of the Social Security tax, which is 2.9 percent, on the rest of your earnings (Social Security Administration, 2005). Employers pay 7.65 percent, the employee pays the other 7.65 percent, and if an individual is self-employed they pay both halves. VOLUNTARY BENEFITS Retirement income plans are a benefit, which gives individuals some form of additional income other than social security after retirement. Retirement income plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA) and the purpose of the act was to regulate private pension plans in order to assure that employees who put
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