Retirement Plan Proposal and Communication Plan HRM/324 Retirement Plan Proposal and Communication Plan Retirement pensions provides a source of retirement income employees can draw on after they stop working, they have to invest for retirement while they are still on the job (Lightbulb Financial, 2013). To take advantage of the opportunity to accumulate tax-deferred earnings and in some cases defer taxes on their contributions as well, employees can participate in employer-sponsored retirement plans and invest in individual retirement accounts (IRAs) that they set up on their own (Lightbulb Financial, 2013). This paper will propose several types of retirement plans that could be offered to employees. In addition, a
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A third type of plan is a hybrid of defined benefit and defined contribution plans that have emerged in recent years. Cash balance plans are defined benefit plans that look like a defined contribution plan. Employees have a hypothetical account (like a 401[k]) into which is deposited what is typically a percentage of annual compensation (Milkovich and Newman, 2008). The dollar amount grows both from contributions by the employer and from some predetermined interest rate (Milkovich and Newman, 2008). Because the Internal Revenue Service isn’t convinced conversions fairly impact older workers, many companies are reluctant to adopt this platform (Milkovich and Newman, 2008).
Employee Retirement Income Security Act of 1974. Organizations are responsible for fulfilling certain regulations established by the government. ERISA was established to regulate the implementation of various employee benefits programs, including medical, life, and disability programs, as well as retirement and pension programs (Martocchio, 2009). The essence of ERISA is protection of employee benefits rights (Martocchio, 2009). ERISA addresses matters of employers’ reporting and disclosure duties, funding of benefits, the fiduciary responsibilities for these plans, and vesting rights (Martocchio, 2009). Companies must provide their employees with straightforward descriptions of their employee benefit plans, updates when substantive changes to the plan are