Retirement Plan and Proposal and Communication Plan

Retirement Plan and Proposal and Communication Plan

When people hear the word retirement he or she often thinks about relaxation and kicking back and not having to worry about income. But, in reality the quality of the life that he or she wants depends on how much they contribute while working. Most people want to luxury of retiring happy and comfortably with personal and financial peace of mind. In this paper, I will discuss the various retirement plans; propose a retirement and communication plan that can be presented to management to help management effectively communicate to employees the importance of creating a retirement plan.

Human resource managers play a critical role in implementing retirement plans for the 150 employees that work here. One of the ways human resource managers can communicate how important retirement plans are to employees is state the pros and cons of having a retirement plan. The individuals, who work during retirement which in most states is 65 years old, should be because they choose to work not because he or she has to earn a living to survive. Unfortunately, too many individuals finding themselves are working because retirement is simply not enough income to supplement him or her monthly because they did not plan correctly.

There are various retirement plans to take into consideration before selecting the best one for that particular individual. In 1974, the Employee Retirement Income Security Act was set in place to provide a comprehensive federal proposal for the guidelines of employee pension and welfare benefits offered by private sector employees. "The Employee Retirement Income Security Act of 1974(ERISA) provides protections and requirements relating to reporting and disclosure, participation, vesting, and benefit accrual, as well as plan funding. ERISA also regulates the responsibilities of plan fiduciaries and other issues regarding plan administration. ERISA contains various standards that a plan must meet in order to receive favorable tax treatment, and also governs plan termination (Stateman, 2009)".

Traditionally there are three main sources of retirement income that are available which are: social security, company pension plans, and retirement investments which are known as 401k plans. Company pension plans are plans that are provided by his or her employer where they get to choose the benefits that the individual receives during retirement. These pension plans are very accommodating to the future of employees because it will help him or her invest in their future.

"401k plan is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts (IRS.Gov, 2011)". There are three pros that employees will benefit from when enlisting for a 401k plan.

* voluntary salary deferrals are excluded from the employee's taxable income

* Employers can contribute to employees' accounts.

* Distributions, including earnings, are includible in taxable income at retirement

There are two different kinds of plans when it comes to pension 401k plans. The typically one many companies use is called a 401k plan but there is also the 403b plan. "The 403b plan is a retirement plan for certain public school employees, employees of tax-exempt organization and ministers (Investopedia, 2011)". Organizations that use the 403b plans provide an annuity contract through a third party insurance company. 403b plans are also known as tax sheltered annuities (TSAs) and tax-deferred annuities (TDAs).

There are certain advantages for companies to choose the 403b plans over the 401k plans. For employers it will not only keep employees happy but create a shared cost of funding between employees and employers. For employees, it not only reduces taxable income through pretax contributions but defers taxes on contributions made to his or her 403b account. But, the best asset of creating a 403b plan is that employees will often pay fewer taxes on