What Type of Retirement Plans Should Employers Consider?

An Employee Benefits FAQ with Joshua A. Diveley.

With respect to qualified retirement plans, there are generally two types of plans to consider, one being the defined benefit plan and the other being a defined contribution plan.

A defined contribution plan is just that, it defines what the employer and you as the employee are going to contribute to the plan. What you end up getting at retirement is going to depend on what your contributions are and what those market returns are. If it does well, you have more. If it does not-so-well, you have less.

A defined benefit plan is going to be one in which the amount contributed each year is going to vary based on what the end benefit is going to be, so, regardless of what the market returns are, you are still going to know as an employee what your benefit is going to be when you retire. For example, you plan may say that at retirement if you have worked there for 20 years you will receive a 50% compensation benefit based on the average compensation over the last 3 years. So that would be an example of a defined benefit.

Based on those 2 types of main plans there are a lot of variations within each type.

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What Kind of Benefits Are Available to Offer to My Employees

An Employee Benefits FAQ with Joshua A. Diveley.

The most common benefits are retirement benefits of some sort and also health benefits. Under each of those you can have variations, for example, under the health there are group medical insurance plans, prescription drug coverage, dental, vision, long term disability and short term disability. There are a lot of options to have under the medical.

In addition, you can have paid time, adoption reimbursement and education reimbursement. There are a lot of options available for employee benefits.

© 2014 Parsonage Vandenack Williams LLC

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