tailieunhanh - Lecture Employee benefits and retirement planning - Chapter 14: Defined benefit pension plan

After beginning with brief sections describing the plans, their advantages and disadvantages, this chapter focuses on defined benefit plan design features. Tax implications are discussed, along with a statement that the plan is subject to all ERISA qualified-plan requirements. | What is it? A qualified employer pension plan that guarantees a specified benefit level at and during retirement Copyright 2009, The National Underwriter Company When is it indicated? employer’s plan design objective is to provide an adequate level of retirement income to employees regardless of their age at plan entry employer wants to allocate plan costs to the maximum extent to older employees older controlling employee in a small business wants to maximize tax-deferred retirement savings Copyright 2009, The National Underwriter Company Advantages 1. employees gain tax-deferred retirement savings 2. can provide adequate retirement levels for employees regardless of age at plan entry 3. benefit levels guaranteed by employer and Pension Benefit Guaranty Corporation (PBGC) 4. plan generally allows maximum amount of tax-deferred retirement saving for older highly compensated employee Copyright 2009, The National Underwriter Company Disadvantages 1. higher plan installation and administrative costs than defined contribution plans 2. complex design; difficult to explain to employees employees who leave before retirement may receive relatively little benefit from plan 4. employer has recurring annual funding obligation regardless of business profit levels 5. employer assumes investment risk Copyright 2009, The National Underwriter Company Design Features Several formulas can be used to determine benefit promised at retirement Flat amount formula provides stated dollar amount to each plan participant Copyright 2009, The National Underwriter Company Design Features Flat percentage formula retirement benefit is % of employee’s average earnings typically requires minimum service for full % benefit with % scaled back for fewer years of service Copyright 2009, The National Underwriter Company Design Features Unit credit formula retirement benefit based on employee’s service with employer typically provides % of earnings for each year of service two . | What is it? A qualified employer pension plan that guarantees a specified benefit level at and during retirement Copyright 2009, The National Underwriter Company When is it indicated? employer’s plan design objective is to provide an adequate level of retirement income to employees regardless of their age at plan entry employer wants to allocate plan costs to the maximum extent to older employees older controlling employee in a small business wants to maximize tax-deferred retirement savings Copyright 2009, The National Underwriter Company Advantages 1. employees gain tax-deferred retirement savings 2. can provide adequate retirement levels for employees regardless of age at plan entry 3. benefit levels guaranteed by employer and Pension Benefit Guaranty Corporation (PBGC) 4. plan generally allows maximum amount of tax-deferred retirement saving for older highly compensated employee Copyright 2009, The National Underwriter Company Disadvantages 1. higher plan installation

• Quản trị kinh doanh
• Employee benefits
• Retirement planning
• Retirement plan design
• Pension plan
• Flat amount formula
• Flat percentage formula
• Employee’s retirement
• Employee benefit planning
• Individual benefits statement
• Employee discounts
• Company cafeterias
• Employee stock purchase plans
• Section 423 plans
• Key employee life insurance
• Corporate owned life insurance
• Simplified employee pension
• Salary reduction SEP
• Scheduled benefits
• Legal services plan
• Lecture Human resource management
• Human resource management
• Human resource
• Quản trị nhân sự
• Employee benefits programs
• Restricted stock plans
• Employee retention
• Strategic Benefits
• Development Benefits
• Financial Reporting
• Financial Management
• Human Resources
• Legal services plans
• Employer select
• Designing retirement plans
• Stock options
• Nonstatutory stock option
• Incentive stock options
• Alternative minimum tax
• Cafeteria plans
• IRC section 125
• Flexible spending accounts
• Medical reimbursement
• Group term life insurance
• Executive carve out
• Split dollar life insurance
• Endorsement method