bharatbhasha.com
Free Articles  >>  Business And Finance >>  Page 1890  >> 

Pension Management Advice For Businesses





What are the types of pension plans companies may offer employees? What are the advantages and disadvantages of each? It would be helpful to know before beginning a pension plan for your employees, if you have not already done so.

401 (k)

A 401(k) is a retirement plan that allows employees to contribute funds to a retirement account. The employer may match some or all of the funds contributed by the employee. The money is taken from pre-tax salary money and grows tax-free until withdrawn at retirement.

The advantages of a 401 (k) include: that such a retirement plan reduces the amount of tax taken out of each check; all money contributed and any growth in the account remains tax free until withdrawn; the company matching money is like extra salary for the employee; and unlike a pension, the money can be moved to a different 401 (k) plan.

The disadvantages for an employee include that it is expensive and difficult to access a 401 (k) account before age 59, and the money a company contributes does not become his property until he has worked for the company for a few years. A disadvantage for the company administering it is it can give an employee a false sense of security if the plan does not provide all retirement needs. Even if the employee did not properly plan for retirement himself, he might blame his lack of funds on his employer.

403 (b)

A 403 (b) retirement plan allows an employee to make annual contributions just like with a 401 (k). Also like with a 401 (k), the money grows tax-free until retirement and contributions are made with pre-tax wages. The plans are for tax exempt organizations such as schools, churches, hospitals, museums, and other public agencies.

An advantage of the plans is money comes out of an employee's check automatically. Those involved choose how their money is invested. Participants may be in a lower tax bracket when they retire and use their money.

Disadvantages of a 403 (b) include investments being limited to fixed income investments, withdrawals are taxable immediately, there is a penalty for early withdrawal, and the fact investments have their own fees.

SEP Plans

SEP plans are the easiest for an employer to establish and maintain, so the simplicity is a major advantage for any company wanting to provide for the retirement of its employees. The plans are for any size business. An employer determines how much to contribute, up to 25 percent, of what an employee earns.

Employers may skip years under the plan, which provides another advantage in lean years. Employees do not contribute to the plan. The plans are tax deductible, and that is another reason some companies choose them. The documents necessary for the pensions are not complicated and are easy to administer. The company involved in the plan does not have to report to the government. Other advantages for business include low start up costs, and portability of benefits.

There are disadvantages for employers. One of the biggest is a requirement that part-time and seasonal employees, those who do not do as much to contribute to a company’s success be included.

Profit Sharing

Profit sharing involves a company providing monetary benefits which a business gives to an employee, apart from any salary or bonus, in the form of cash, stocks, and bonds. The money can be given at retirement, and how much will be given depends on the profitability of the company.

The advantages of profit sharing is that it unites companies and employees in the goal of making a company profitable, the motivation for an employee is high, which benefits the company, the fact the employee will identify with the company, and the company will be providing a good income for an employee or a former employee who has retired.

The disadvantages include that an employee may not focus on quality, but only on profitability, and the fact that employees' salaries could go up if a company is profitable, even if they are not doing a good job.

Defined Benefit

A Defined Benefit pension plan is a plan in which an employer promises a specific monthly benefit when the employee retires. The amount to be given is determined by a formula.

One advantage is an employee does not have to contribute.

Disadvantages include the fact that such plans often do not keep pace with inflation, and the retiree has no say in how the money is invested.
About Author Chris Tomkins :

For more information about Pensions Management, visit: <a href="http://www.pensionsfirstanalytics.com" target="_blank">http://www.pensionsfirstanalytics.com</a>


Article Source: https://www.bharatbhasha.com
Article Url: https://www.bharatbhasha.com/finance-and-business.php/306023


Article Added on Monday, July 11, 2011
LD
Other Articles by Chris Tomkins

Why It s Important For Businesses to Assess Risks Over Pensions
What are the risks to businesses that spend too much money on their pension funds for employees? Could they be putting the future of their company at risk? Some believe when the economy turned worse in 2008-2009, many companies found themselves at risk because of how much they had spent on pension funds. These included General Motors and the Ford Motor Company. Even many government agencies found themselves losing money through investments of pension funds in the Stock Market. Many government...

How to Manage Defined Benefit Pensions Risk Using Pfaroe
Defined benefit pensions risk management is relative to a pension plan. The plan will specify a monthly benefit for the employee. That said, the benefit is a pre-determined amount which is calculated according respective of a certain formula. The remaining content provides detail as to how the benefit is determined and subsequently how the risk is managed using management tools like Pfaroe. Generally a defined benefit pension is calculated based on an employee's earnings history, the length of...

A Guide to Defined Benefit Pension Plans
A defined benefit plan is one of the two commonly available retirement options offered by employers to help their employees plan for the future. Under this type of a plan, the company specifies what benefits will be received by the employee upon his or her retirement, based on the years of service provided to the company. This type of plan is most commonly referred to as a pension; it was once the only option, before the passage of 401(k) opened the door to defined contribution plans. Under a...

Why Modern Businesses Should Lease Company Cars
Many businesses face the tough decision when it involves purchasing or leasing vehicles that are an integral part of the company. While there are still tax incentives available for those who buy their business fleet vehicles, leasing could possibly yield even more benefits to the business in relation to taxes. What is leasing and why is it any different than buying? Simply put, when a company or individual leases a vehicle, the lessee pays for the depreciation of the vehicle. An individual or...

Franchises A Great Way to Own Your Own Business
The entrepreneurial spirit is an amazing phenomenon. It drives people to seek out a way to be their own boss and manage their own company. These people drive the engine of economic success - small business. Unfortunately, four out of five new businesses fail within five years. On the other hand, 91% of new franchises are profitable. It offers you the chance to own your own business but also provides all the market research and training of an already proven, successful business. A franchise is...

The Benefits of Business Car Leasing
In today's global economy, businesses are examining every expense to determine the most efficient ways to allocate capital. Competitive entrepreneurs benefit from fiscal restraint. Each expenditure should be scrutinized to ensure that it yields satisfactory performance. Many businesses rely on company transportation to accomplish various goals. However, automobiles are expensive. Some companies purchase business cars outright with cash. Conversely, other business leaders choose to lease cars....

Facts and Advice About Business Growth
Why is it that some companies set a clear path for growth whilst others simply go day to day, putting out one fire after another? Why do some companies grow regardless of whether their industry grows, whilst others simply rise and fall with either the growth or decline of their market? After all, any company can grow in good times. Only the best continue to grow no matter what. Companies that experience consistent growth understand the importance of strategic planning initiatives that link...

New Car Leasing and Why It s Better Than Buying
Leasing a new car is growing in popularity and it's great for individuals who are looking for a good way to have a lower monthly car payment. People who like the option of having a new car every couple of years and the luxury of low maintenance costs and affordability. Leasing is also highly beneficial for businesses that need company cars. Less costly than purchasing the car and the business also gets a great tax write off. One of the most important decisions in life comes when shopping for a...

Moving Home The Environmentally Friendly Way
It seems everyone is doing their part in order to create a more environmentally friendly world. Residences and businesses are pitching in to make their homes and offices greener. Is this possible for a removals company though? There is actually a number of ways in which this type of company can be more eco-efficient. When looking for a man with a van or moving company that is eco-friendly, there are certain things to be aware of that can help you find the company you are looking for. First of...

How to Finance Business and Keep on Top of It
Financing a business involves evaluating many different options. These options involve considering bank loans, commercial mortgages and soliciting investor funds. When starting a business, two things are always necessary. The first is a plan, the second is capital. Many people are confused about the nature of capital. The popular notion is that capital means financing available in the bank, but this is actually incorrect. The capital comes from the ideas that start the business and create the...

Click here to see More Articles by Chris Tomkins
Publishers / Webmasters
Article ID: 306023
DELINK URL from Authors Bio
REMOVE Article
Tell A Friend
Leave A Comment!
Download this article in PDF
Report Article!
Search through all the articles:


246 Users Online!!
Related Articles:
Latest Articles:
 
Business And Finance >> Top 50 Articles on Business And Finance
Category - >
Advertising Advice Affiliate Programs Automobiles
Be Your Own Mentor Careers Communication Consumers
CopyWriting Crime Domain Names DoT com Entrepreneur Corner
Ebooks Ecommerce Education Email
Entertainment Environment Family Finance And Business
Food & Drink Gardening Health & Fitness Hobbies
Home Business Home Improvement Humour House Holds
Internet And Computers Kiddos and Teens Legal Matters Mail Order
Management Marketing Marriage MetaPhysical
Motivational MultiMedia Multi Level Marketing NewsLetters
Pets Psychology Religion Parenting
Politics Sales Science Search Engine Optimization
Site Promotion Sports Technology Travel
Web Development Web Hosting WeightLoss Women's Corner
Writing Miscellaneous Articles Real Estate Arts And Crafts
Aging


Disclaimer: The information presented and opinions expressed in the articles are those of the authors
and do not necessarily represent the views of bharatbhasha.com and/or its owners.


Copyright © AwareINDIA. All rights reserved || Privacy Policy || Terms Of Use || Author Guidelines || Free Articles
FAQs Link To Us || Submit An Article || Free Downloads|| Contact Us || Site Map  || Advertise with Us ||
Click here for Special webhosting packages for visitors of this website only!
Vastu Shastra

Virtual Linux Server Hosting Provided By AwareIndia







Company IDS