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RETIREMENT PLAN

A secured future , A Secured benefit

LIFE ISNT STATIC

Web definition Retirement plan

An arrangement to provide people with an income during retirement

when they are no longer earning a steady income from employment.

STAGES OF RETIREMENT PLAN ?


Every retirement plan has a life span with four stages through which the plan evolves Choosing, Establishing, Operating, and Terminating.

Stage One: Choosing You begin thinking ahead: towards retirement in general; and towards learning specifically about ways that money can be put aside for your retirement and, as a business owner, the retirement of your employees, as well. Stage Two: Establishing You take the necessary steps to put your plan in place. Depending on the type of plan, the range of administrative steps may vary, such as: arranging a fund for the plans assets adopting a written plan notifying eligible employees developing a recordkeeping system.

Stage Three: Operating You want to operate your retirement plan so it grows and evolves into the valuable retirement vehicle you need. Depending on the type of plan established, there are a number of steps that you need to take to operate your plan on an ongoing basis, such as: covering eligible employees making appropriate contributions keeping the plan up-to-date with the retirement plan law managing the plan assets providing information to employees participating in the plan distributing appropriate benefit. Stage Four: Terminating When your plan no longer suits the purposes of your business, you will close out your retirement plan and notify the appropriate parties

Advantages Retirement Plan


Why Should You Set Up an Employee Retirement Plan, and What are Some of the Benefits? A retirement plan has lots of benefits - for you, your business, and your employees. .1)AsContributions made to a pension plan are tax deductible. 2)Employer contributions do not result in any payroll taxes because they are not included in the calculation to determine contributions to other programs, such as employment insurance etc. 3)Investment income generated by the pension fund in which contributions accumulate are tax exempt. 4)The employer contributions are vested to the plan member as soon as his or her membership begins. 5)In the event of a member's death, his or her spouse receive a pension or other benefit. If there is no surviving spouse, a benefit can be paid to a designated beneficiary or to the member's heirs. 6)The pension fund does not belong to the employer; it cannot be seized if the business goes bankrupt.

Retirement Plans
Defined Benefit Plan A defined benefit plan promises a specific monthly payout at retirement, according to a fixed formula that usually depends on the members salary and the number of years membership in the plan. For example, 1 % of average salary for the last 5 years of employment for every year of service with an employer. The benefits in most traditional defined benefit plans are protected, within certain limitations, by federal insurance provided through the Pension Benefit Guaranty Corporation (PBGC). Defined Contribution Plan On the other hand, defined contribution plan does not promise a specific amount of benefits at retirement. Instead, it will provide a payout at retirement that is dependent on the amount of money contributed to the employees individual account by the employee or employer or both, and the performance of the investment vehicles being utilized. The employee will then receive the balance in their account that is based on contributions, plus or minus investment gain or losses. The fluctuation of the value of the account is due to the changes in the value of the investments. 401(k) plans, 403(b) plans, employee stock ownership plans, and profit-sharing plans. Hybrid Plans A cash balance plan is a defined plan made by the employer with the help of consulting actuaries, a group of business professionals who deal with the financial impact of risk and uncertainty, to appear as if they were defined contribution plans. They have notional balances in hypothetical accounts where, normally, each year the plan administrator contributes an amount equal to a certain percentage of each participants salary; a second contribution, which is called an interest credit is also made. These are not actual contributions and further discussion is beyond the scope of this entry.0 Target Benefit plans are defined contribution plans made to match or look like defined benefit plans. This would only work if all actuarial assumptions are actually realized

VOLUNTARY RETIREMENT PLAN


Definition:

Voluntary retirement is an act on the part of employee to give up employment willingly and without compulsion . It is a choice given to an employee. He need not disclose the reason for his voluntary retirement. In other words, it is an unilateral act of the employee, to be exercised by him unilaterally.

REASONS FOR ACCEPTANCE OF VRS


1.Fear of uncertain future. 2.Financial Needs. 3.Dissatisfaction with the job. 4.Sickness or old age. 5.Allurement by management. 6.Dream of own business.

7.Miscellaneous a)Wants to leave and settle in his own native place. b)Family compulsions in case of female workers.
c)Fresh Employment.