Retirement Plan Selection.ch.docx - 1 Retirement Plan Selection HRM\/324 2 Retirement Plan Selection A large amount of companies or organizations have

Retirement Plan Selection.ch.docx - 1 Retirement Plan...

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1Retirement Plan SelectionHRM/32410/16/2017
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2Retirement Plan SelectionA large amount of companies or organizations have retirement plans for employees to participate in. There are several different plans that employers can select to have available for their employees such as; 401(k), 403(b), Pension, Annuities, IRA’s and Estate planning. Each plan offers different benefits and one may not be best for all employees or people. Choosing the right plan for each individual is important in knowing how to save for the future. In our scenario,we have a new employee that joins a company at age twenty-four making forty thousand per year.Currently, banks are paying five percent interest on saving accounts, and the rate of return on the company stock is four percent per year. During benefits enrollment, the employee stated that she would like to retire at age sixty with three million dollars in her retirement account. Which retirement account is best for this employee?403(b)According to "Publication 571 (01/2017), Tax-Sheltered Annuity Plans (403(b) Plans)" (2017), “A 403(b) plan is a retirement plan for specific employees of public schools, tax-exempt organizations and certain ministers.” These plans can invest in either annuities or mutual funds. A 403(b) plan is another name for a tax-sheltered annuity (TSA) plan. There are a few benefits for a 403(b) plan. This type of plan is not taxed as the employee is paying into the plan and is only taxed when the individual begins to withdrawal from the annuity. This also means that the earnings or gains of this type of account are not taxed until it is withdrawn from. And last, According to "Publication 571 (01/2017), Tax-Sheltered Annuity Plans (403(b) Plans)" (2017), "an individual may be eligible to receive a tax credit for elective deferrals to these types of retirement plans.” Employers are also able to match the contribution that the
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