Explain why an employer would decide whether to have a qualified or nonqualified retirement plan. What provisions would the employer consider including in each type of plan?
The employers create qualified and non-qualified retirement plans for the benefit of the employees. The major difference between qualified and non-qualified retirement plans is due to the tax treatment. In the non-qualified plan the contributions are not deductible to the employer until the there is a withdrawal by employee and is taxed on the income. The contributions by employer to a qualified plan can be immediately deducted. An employer would decide to use non-qualified retirement plans when they want to defer a higher amount of money to a retirement plan compared to a qualified plan, or want to retain or hire an employee by giving added benefits not within the standard qualified benefit plans.
For the employer, qualified plans need to be offered to the employee if they meet very minimal requirements i.e. 1 year of full time employment. Moreover the qualified plans are subject to annual limits on contribution set by the IRS each year; but contributions to non-qualified retirement plans are unlimited
Explain why an employer would decide whether to have a qualified or nonqualified retirement plan. What...
THIS IS FOR AN EMPLOYEE BENEFITS AND RETIREMENT CLASS. QUALIFIED PLANS WOULD BE SOMETHING LIKE A 401K, IRA, ETC. Next week we are going to discuss establishing, administering and terminating qualified plans. Assume you are 50 years old. You have started your own business and you have 5 employees. You have decided to add a qualified plan to your employee benefit package. Tell me the following (you can assume whatever you want with regards to your answers): 1. What plan...
1) Discuss the steps required when installing a qualified plan along with any difficulties that may be involved. 2) Discuss required spousal benefit provisions, including QDROs. Include potential hardships for either spouse as a result of these provisions. Also, discuss what would likely happen if these provisions were withdrawn. 3) Discuss situations in which an individual may not be allowed, or may not wish to use, a Roth IRA for retirement planning.
Consider that you are 30 years old and have just changed to a new job. You have $91,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $400 each month into your new employer's plan. If the rolled-over money and the new contributions both earn a 7 percent annual return, how much should you expect to have when you retire in 38 years?
Retirement Funding. Barry has just become eligible for his employer-sponsored retirement plan. Barry is 40 and plans to retire at 65. Barry calculates that he can contribute 4,300 per year to his plan. Barry's employer will match this amount. If Barry can earn a return of 8% on his investment, he will have 628,711.08 at retirement. How much would Barry have at retirement if he had started this plan at age 30? If Barry had started this plan at age...
Abiha is a 52-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan. Before IRA contributions, his AGI is $68,000 in 2018. What is the maximum amount she may contribute to a tax deductible IRA? A) $4,500 B) $5,500 C) $6,500 D) $7,500 Prisha, a single 40-year-old physician, is covered by a qualified retirement plan at work. Her salary is $120,000, and her total AGI is $132,000. The maximum contribution she can make to...
Martin retired in May 2019. His pension is $1,000 per month from a qualified retirement plan to which he contributed $42,000, and to which his employer contributed $12,000. Martin was 67 when the plan payments started. During 2019, he received 8 months of payment for a total of $8,000 from the plan. a. Using the simplified method, calculate Martin's taxable income for 2019 from the retirement plan distributions. b. If Martin's contributions to the plan had been $25,200, instead...
HELP! You have just been hired by your new employer and must choose between two retirement plan options... You have just been hired by your new employer and must choose between two retirement plan options: (1) the state’s defined benefit plan and (2) a defined contribution plan under which the employer will contribute each year an amount equal to 8 % of your salary. The defined benefit plan will provide annual retirement benefits determined by the following formula: 1.5% x...
What type of pension plan would an employer want to offer, a defined contribution plan or a defined benefit plan? Explain your reasoning behind your answer.
Barry has just become eligible for his employer-sponsored retirement plan. Barry is 40 and plans to retire at 65. Barry calculates that he can contribute $3,400 per year to his plan. Barry's employer will match this amount. If Barry can earn a return of 9% on his investment, he will have $575,966.09 at retirement. How much would Barry have at retirement if he had started this plan at age 30? If Barry had started this plan at age 30, the...
Barry has just become eligible for his employer-sponsored retirement plan. Barry is 40 and plans to retire at 65 . Barry calculates that he can contribute $4 comma 400 per year to his plan. Barry's employer will match this amount. If Barry can earn a return of 6 % on his investment, he will have $482 comma 808 at retirement. Assuming a return of 6 %, how much would Barry have if he could invest an additional $900 per year...