Defined-contribution plans

Defined Contribution Plans These are quite different. They do not guarantee a certain amount of pension benefit. Instead, they set out circumstances under which the employer will make a contribution to a plan on your behalf. The most common example is the 40 l(k) savings plan. Pension benefits are not guaranteed under these plans. 

Serious responsibility for financing much of one s own retirement begins earlier and lasts longer in a defined-contribution plan than it does in a... 

Among all workers, participation in defined benefit plans has fallen while participation in defined contribution plans has risen. In defined benefit plans, companies promise to pay workers a specified amount in retirement benefits. In defined contribution plans, companies promise to contribute a specified amount, but make no assurance as to the final payout. Among all workers, there has been a decrease in the percentage covered by defined benefit ( payout ) plans and an increase in the percentage covered by defined contribution ( pay in ) plans. For more and more workers, this means that risk — in terms of steady retirement income — has been transferred from the employer to the eventual retiree (Figure A4.8). 

B) in the case of a defined contribution plan, the cessation of allocations to an employee s account, or the reduction of the rate at which amounts are allocated to an employee s account, because of age. 

A) The terms employee pension benefit plan , defined benefit plan , defined contribution plan , and normal retirement age have the meanings provided such terms in section 1002 of this title [section 3 of the Employee Retirement Income Security Act of1974]. 

Section 125 plan a term used to refer to flexible benefit plans. The reference derives from the section of the IRS code which defines such plans and stipulates that employee contributions to such plans may be made with pre-tax dollars. 

Defined-contribution pension schemes take three main forms, which are 401k, profit-sharing, and money-purchase plans. Some employers supplement them with defined benefit plans, employee stock purchase plans, or stock options. 

Participation is Defined Contribution and Defined Benefit Retirement Plans... 

Once it has been established that you may set up an individual retirement account, you must consider the maximum amount of contributions which can be made under this type of plan. The contribution limitations are 1500 or 15% of your earned income, whichever is less. For these type of plans, earned income is defined as wages, salaries, professional fees, and self-employment income. It does not, however, include earnings from property, such as interest, dividends, or rents. These latter types of earnings are considered passive income and cannot be considered in calculating the amount of contribution which may be made. 

Pension Plan The firm offers a pension plan to qualified employees. In this case, in order for a Y to appear, the editors believe that the employer offers a defined benefit or cash balance pension plan (see discussions below).The type and generosity of these plans vary widely from firm to firm. Caution Some employers refer to plans as pension or retirement plans when they are actually 401(k) savings plans that require a contribution by the employee. 

Defined Benefit Pension Plans Pension plans that do not require a contribution from the employee are infrequently offered. However, a few companies, particularly larger employers in high-profit-margin industries, offer defined benefit pension plans where the employee is guaranteed to receive a set pension benefit upon retirement. The amount of the benefit is determined by the years of service with the... 

Employee pharmacists must make many decisions regarding financial management. Among the most important is the specific types and extent of benefits provided by the employer. Benefits often amount to an additional 30 percent of an employee s salary and include such things as health, life, and disability insurance and retirement planning issues such as 401(k) contributions and defined pension benefits. 

Once employer-sponsored health insurance began to cover more people in the U.S., it became increasingly popular. As medical expenses increased, insurance became a greater necessity. Expanded insurance coverage increased compensation without additional taxes, and it provided vital financial protection if hospitalization was necessary. The benefits to employers became codified as well. The Revenue Act of 1954 defined employers contributions to health plans as tax-exempt and clarified that these were deductible business expenses. Recognizing that the burgeoning system was leaving out many workers. President Eisenhower proposed, but failed to achieve, market reforms in 1956. 

While the SOAP approach is very practical and systematic, it may not be appropriate for many pharmacists because there are limitations with respect to consistent access to certain data elements available in many practice settings. Additional concerns relate to the redundancy created in a patient record if the pharmacy documentation is to become part of an existing record. Such patient medical records are already voluminous, and only succinct, essential information needs to be added. Thus the contributions of pharmacist-generated documentation should be supportive of a patient s care plan to assist in achieving defined therapeutic objectives and/or avoiding drug-related problems (DRPs) where appropriate."... 

In some pension plans several employers contribute to a single fund, usually to cover unionized workers. These plans are not relevant to North American chemists, who have no union. The pertinent and also commonplace arrangement calls only for a single company to contribute to one pension fund, which may include a defined-benefit or defiried-ccmtrihutian scheme. Some corporate pension plans include elements of both these schemes, so it s vital to understand them and the differences between them. 

Defined-benefit pension plans. If, in retirement, you receive from your former employer a fixed monthly payment, your pension exemplifies the defined-benefit type. The structure of such a plan makes your employer legally responsible for implementing all of it. It requires the company but not the employee to make a minimum annual contribution, which comes from investments. The employer must make up any investment losses to maintain its annual contribution. It may not end the plan without sufficient assets to provide the promised benefits, and its obligation to continue payments to employees survives bankruptcy. The Pension Benefit Guarantee Corporation, which is wholly owned by the U.S. government, secures payments to employees who participate in defined-benefit schemes. Consequently, participants can never exhaust their benefits while they live, and their spouses may continue to receive pension payments after the participants die. Regular lifetime payments are important features of defined-benefit pension plans, about two-thirds of which disallow lump-sum distributions at retirement (Kehrer, 1995). 

MONEY-PURCHASE PLANS. Defined-contiibution pension plans include a variant in which the employer promises annually to contribute a certain percentage of salary to each employee s account. These plans, known as money-purchase plans, allow the employer to avoid taxes on as much as 25% of the recipient s salary. In this sense they are comparable to 401k plans. Money-purchase plans, imlike profit-sharing plans, forbid employees to withdraw funds before retirement. 

---