Kryptonite is a telecommunications provider located in Iowa with hundreds of thousands of employees. Their CEO, Clark Kline is considering the replacement of their expensive defined benefit (DB) pension plan which requires large contributions every year with a 401(k) where the employees will bear the investment risk. The majority of the workforce is young and the top executives are ll in their 50's and 60's. 6. Clark gas heard that ADP testing is an issue for 401(k) plans. What are three ways to minimize that issue?
Clark,CEO want that most of benefits accrue to senior executives who are in their 50's and 60's. In such a situation Roth IRA(special retirement account) is best option available to him. It is special retirement account where you pay taxes on money going to account and withdraw tax free after age of 59.5 years by meeting conditions . When we feel our taxes are to be higher in retirement It is good option to choose. It benefits older employees than younger employees. Most senior employees will be crossing this age limit before than other employees about helps them to enjoy tax free withdrawals from account in future. But younger ones choose normal IRA plan since their contributions are eligible for tax rebates thus in helping reduction of total taxes.
Kryptonite is a telecommunications provider located in Iowa with hundreds of thousands of employees. Their CEO,...
Kryptonite is a telecommunications provider in Iowa with hundreds of thousands of employees. Their CEO, Clark Kline, is considering the replacement of their expensive defined benefit (DB) pension plan with a 401(k) where the employees will bear the investment risk. The majority of the workforce young and the top executives are all in their 50's and 60's. 1. As Clark's top financial advisor, what type of qualified retirement plan would you recommend instead of the 401(k)if he wants the majority...