Retirement Services – A Boon in the Golden Years.
Employers Resource helps every business at all stages of growth and development offering Employee Benefits, Payroll Services, Human Resource Compliance, Workers’ Compensation, and Full Service HR Packages! Want to find out more? Call us today at (800) 559-2350! Let’s take some weight off your back.
There are several Retirement Services that can add value to your organization and the lives of your employees. By providing a retirement plan whose benefits can be easily understood and participated in, employees can meet their long- term financial goal of being retirement ready.
Providing employees with reliable Retirement Services can serve many purposes, from tax-sheltering income, to helping retain talent and attract potential new talent.
What do Retirement Services provide to the retiring employee?
• Through education programs and other forms of guidance they impart confidence in employees that they are on the right path to retirement readiness.
• They make retirement administration easy by integrating employees’ payroll and 401(k) plan (or any other plan) recordkeeping systems.
• They manage employees’ multiple retirement accounts in different institutions. They work as an administrator, buying pre-approved funds, re-balancing funds and giving consolidated reports every year.
What is the single most key area under Retirement Services?
One of the key areas under Retirement Services is retirement plans related to employee finance and savings.
There is a comprehensive list of plans available to choose from. Some are:
1. Qualified Retirement plans
Qualified plans must meet a certain criteria of requirements set down in the Internal Revenue Code like minimum coverage, participation, vesting and funding requirements. In return, IRS ensures certain tax advantages to encourage businesses to establish retirement plans.
2. Profit sharing plans
The profit sharing plan is the most flexible qualified plan available generally. Company contributions are made on a discretionary basis. The amount to be contributed to the plan, is decided by the employee him/herself. Company contribution cannot exceed 25% of the total compensation of all eligible employees for tax deduction purposes. For a single employee a maximum eligible compensation that can be considered is $265,000 in 2015.
Contributions are usually allocated in proportion to compensation, and may be allocated using a formula that is approved by Social Security, thus resulting in higher contributions for higher paid employees.
3. 401(k) Plans
The most popular plan, employees perceive 401(k) plans as a valuable and flexible option. Employees benefit from this plan even if the employer makes little or no contribution. Employees can voluntarily make pre-tax contributions through payroll deductions up to a maximum limit annually. The plan allows employees age 50 and older to be able to make “catch-up” contributions, up to a maximum limit annually. Employees can also make after-tax Roth contributions through payroll deductions, instead of pre-tax contributions. This means an employee is allowed to receive a tax-free distribution of the contributions (as well as the earnings on the employee’s Roth contributions if certain criteria are met). The employer can match some portion of the amount deferred by the employee so as to encourage greater employee participation.
The 401(k) is a kind of profit sharing plan and so profit sharing contributions may be made in addition to or instead of equal contributions. Employees can take the opportunity to take hardship withdrawals or to borrow from the plan.
4. Defined Contribution plans and Defined benefit plans.
Employers can choose from two basic types of retirement plans, defined contribution and defined benefit. Both defined benefit and defined contribution plan may be sponsored to maximize benefits.
Retirement Services ensure that with proper planning and foresight ,retirement can truly be a fulfilling period to look forward to.
Employers Resource helps every business at all stages with growth and development. Find out more! Call us today at (800) 559-2350.
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