1 Research the typical categories of retirement annuity plans?
2. what is a 401 (k) plan? What is a Roth IRA ? How are they different ?Why were they developed?
3. How do they work?
4. Compare and contrast the features of the two types of retirement plans?
5. What are the advantages of participating in 401 (k) ? . What are the disadvantages?
6. What are the limitations and downsides of having a 401 (k) plan?© BrainMass Inc. brainmass.com June 3, 2020, 7:28 pm ad1c9bdddf
1. Research the typical categories of retirement annuity plans?
Qualified plans?Qualified retirement plans typically cover substantially all employees and have special tax advantages. These types of plans are subject to somewhat complex rules to obtain tax advantages. Two broad categories cover most qualified plans: defined benefit and defined contribution.
Within each category, there are specific types of plans that meet certain needs and objectives. In addition, a business can set up somewhat less complex plans by using IRA's. Two examples are the Simplified Employee Pension Plan (SEPP) and Savings Incentive Match Plan for Employees (SIMPLE) which are variations of a defined contribution plan.
Qualified plans may be funded through mutual funds, annuities, and/or life insurance purchased by the business. A Financial Representative or Benefit Specialist can consult with you on your options and provide you with a detailed analysis of possible solutions.
Nonqualified executive benefit plans?Selective plans provide retirement benefits and in some cases supplemental death benefits to select key employees and can be used to replace or enhance group or tax-qualified retirement benefits.
The tax advantages are generally not as immediate as they are with qualified plans, but nonqualified plans are not subject to the strict rules governing qualified plans.
Two broad categories cover most nonqualified executive benefit plans based upon whether the benefits provided are in lieu of, or in addition to, current compensation. These are deferred compensation plans and supplemental employee retirement plans, respectively.
Nonqualified executive benefit plans are unfunded, from a tax standpoint. The business can choose to set aside funds or to purchase assets, such as life insurance, to informally finance the benefit. However, the benefit is provided strictly from the assets of the business?not from any separate fund. A Financial Representative or Benefit Specialist can consult with you on your options and provide you with a detailed analysis of possible solutions.
Individual plans?Employees may also participate in individual retirement plans that offer personal tax advantages. The employer may assist employees in setting up these plans to enhance retirement benefits without all the requirements of a qualified plan.
Two common types of individual retirement plans are individual retirement accounts (IRA's) and tax-deferred annuities.
2. What is a 401 (k) plan? What is a Roth IRA? How are they different? Why were they developed?
A 401(k) plan is a defined contribution plan offered by a corporation to its employees, which allows employees to set aside tax-deferred income for retirement purposes, and in some cases employers will match their contribution dollar-for-dollar.
Roth IRA is a type of ...
This solution is comprised of a detailed explanation to research the typical categories of retirement annuity plans, answer what is a 401(k) plan, what is a Roth IRA, how are they different, why were they developed, how do they work, compare and contrast the features of the two types of retirement plans, answer what are the advantages of participating in 401(k), what are the disadvantages, and what are the limitations and downsides of having a 401(k) plan.