Contribution Plans and Benefit Plans Assignment Help

Both are the retirement plans but have some different features. Defined contribution plan provides the actual amount of money to employee at retirement that depends on the contribution and gains of the account. On the other hand, defined benefit plan is a retirement account of the employees in which employer contributes the money and decides the investment plan. The amount of money at retirement is based on the salary and time period of working in organization. ESOP: Employee Stock Ownership Plan (ESOP) is a trust that is established by a corporate. It acts as a defined contribution, qualified and retirement plan to invest in the stock of sponsoring employer. Company gets various benefits including tax savings, increased cash flows and productivity through motivated employees. 401(k): The 401(k) plan of every company is different. Companies offer more diverse investment choices. In this plan, employers contribute average 3.2% of pay and employees have 18 fund options to invest their money. Employees can also contribute in this plan. IRA: Individual Retirement Account (IRA) offers tax deferred advantages at the time of retirement. Employees don’t pay taxes until they withdraw funds in their accounts. It allows compounded growth of fund and promotes personal savings. It offers flexibility in investment styles. Employees can select investment options according to their needs. SEP: These plans are established and funded by a business. In this, contribution limit is 25% of compensation or $45,000 which is less. In this, contribution is deducted from the employer’s tax return, so it increased earnings of the business. Keogh: It is a tax deferred retirement plan for self employed individual or business persons. In this, contributions are tax deductable up to 25% of annual income. SIMPLE: It is an IRA based plan in which employees has the option to make contribution of his salary and receive same contribution from the employer. All contributions are made directly in an IRA account of each employee. Roth: It is established and funded by individual taxpayer before the tax filing deadline. In this, distributions are free from tax and penalty. Education IRA: It is a nondeductible account that allows tax free withdrawals for higher education of children. It is penalty free and tax free account. Avail 100% original HR assignment help and business plan case study assignment help from our experts at info@www.assignmenthelpexperts.com