What is the type of retirement plan?

During the retirement of an employee, income stops whereas expenses don\’t stop during his life. So financial planning is required at the time of retirement. Thus, for meeting such a purpose , retirement planning is essential on the way to retirement. Thus retirement plans contain the process of finding out the income sources, budgeting the expenses, implementing a savings operations program and assets management for the benefits of employees.

In simple words, Retirement planning one has to be prepared for life after work ends. Most often, retirement planning involves saving money into a retirement account and purposefully saving money for the future. Because inflation rate is increasing day by day, due to which saving today is not sufficient for meeting the cost of necessity. What is the type of retirement plan?

To get this security retirement planning encompasses the plans and actions that individuals take to prepare his life against uncertainty after the retirement life. What is the type of retirement plan?

There are some best retirement plans which are considered in India. Which applied to the retirement plans. These are the following best retirement plan:-

Defined Benefits Plan
Defined Contribution Plan
Simplified Employee Pension Plan
Profit Sharing Plan or Stock Bonus Plan
401 (K) Plan
Employees stock ownership Plan
Money Purchase Pension Plan
Cash Balance Plan
Lump-sum Retirement Benefits
Tax Sheltered Annuities Plans
Saving Incentive Match Plan
Keogh Plans

(1). Defined Benefits Plans:- This benefits involves a monthly benefit which is provided to employees at the time of retirement. Such benefits are calculated through the formula that considers such factors as salary and services. For Example:- a fixed amount as 1000 per month will be paid to the retired person after the retirement. Such plans are simple and mostly liked by the employees.

(2). Defined Contributions Plans:- This plan does not involve paying a specific amount of benefits at the time of retirement. In this plan employee and employer contribute to the employee\’s individual account under the plan. This account gives almost 5 percent of earnings annually. Then these funds are invested on the employees behalf. Employees will get a contribution plus the investment gains in their account. But the value of investment will fluctuate due to the changes in the value of the investment.

(3). Simplified Employee Pension Plan:- It is an easy retirement saving scheme. It is a plan in which employees contribute for the tax favoured scheme basis to individual retirement accounts. So Individual Retirement Accounts are required for the employer contribution. Sometimes this account is established with a salary reduction contribution. Then employers continue to allow salary reduction contributions to the plan. What is the type of retirement plan?

(4). Profit Sharing Plan and Stock Bonus Plan:- It is a plan constructed by the employer in which contribution is provided in the plan out of profit for the purpose of determined to give contributions to employees at the time of their retirement. In this plan formula is used for the purpose of allocating to each participant a portion of annual contributions in their contribution account. What is the type of retirement plan?

(5). 401 (K) Plan:- It is elected by the employees to contribute to their retirement funds. However, employees have the right to defer such an amount as per their desire instead of contributions. Thus, this plan contains some special rules governing the operations of a 401 (K) plan. However, employers may advise the employees to select any limit of contribution. Thus, in this plan employees assumed their responsibility for their retirement income by contributing part of their income.

(6). Stock Ownership Plan for an employee:- It is a type of pre expressed contribution plan in which the investments are invested in the employer stock. Then which fund goes to employees at the time of their retirement as per their contribution. What is the type of retirement plan?

(7). Money Purchase Pension Plan:- It is a plan in which a fixed annual contribution from employer to employee\’s individual account. Thus, a money purchase plan of retirement requires regular contributions by the employer to the employees accounts. So the plan contains certain rules as well as contributions funds. What is the type of retirement plan?

(8). Cash Balance Funds:- It is a defined contribution fund concerned with the cash contributions fund. Such cash balance funds express the promised benefits to the employees. In this account every year a certain 5% contributed is credited by employees and employer each every annual year. And a fixed interest rate is also accounted for in this contribution fund. So due to the market fluctuations no effect will occur on the contributions fund.

Because employees will get the promised amount by the employer at the time of retirement age. Because all risks and rewards on the plan assets are borne solely by the employer. Thus a participant receives benefits under a cash balance plan. These are expressed in terms of cash balance funds accounts.

(9). Lump-sum Retirement Benefits:- These plans are constructed by the employer. In which contributions on savings plans. Although employees may contribute as well as. Employees may be entitled to borrow a sum of money from their vested savings. What is the type of retirement plan?

(10). Tax Sheltered Annuities Plans:- These may be offered by tax exempted and education organisations for their employees. On the Retirement of a person are offered a choice of a lump-sum or a series of monthly payments. These plans are funded by tax deductible employee contributions.

(11). Savings Incentive Match Plans:- Such plans are designed by the small business. These savings incentives are individual retirement plans. Employees fund them on a pretax basis and employees are required to make matching contributions. The funds in the account grow on a tax deferred basis like the plans as a 401 (K). What is the type of retirement plan?

(12). Keogh Plans:- These plans are constructed especially for self employed individuals. Funded entirely from the workers\’ contributions not by the employer. These taxes are deductible for the most part of the Keogh plan funds And permits disbursement on a lump-sum or periodic basis.

Conclusion:- Such retirement plans are established by various businesses as per the desires of employees and employers. These plans provide various benefits to the employees such as taxes, investment and returns. Any plan may be adopted by the organisation or business with the consent of employees. What is the type of retirement plan?

Note:- There are following answers concerned with the investment. Which must be considered by the investors before the investment. These are following:

Avenues of Investments

Risk determination of investments

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