retirement plan

Discussion Question

Answer the bullet points below. Each bullet point needs to be addressed. Use in-text citations and cite references. Please make sure references are accessible and include the link to the webpage in the reference.

Prompt: Consider defined-benefit retirement plans and defined-contribution retirement plans and document the primary characteristics of each. Specifically, contrast the responsibilities of the employer in administering each plan.

Answer the following questions:

• Which plan is more risky for an employer?
• Which plan is more risky for an individual employee?
• Which provides the individual employee with more resources at the conclusion of employment?
• What are the personal income tax considerations for the individual employee once payments commence under each plan?

Answer preview

Retirement Plan

Defined -benefit retirement plan and defined- contribution retirements plans have unique responsibilities for the employer. According to IRS (n.d.), a defined benefit plan is sponsored by the employer as a fixed pre-established benefit based on factors such as employment length and salary history. A defined contribution plan, on the other hand, involves building up a retirement income through a contribution by the employee and their employer (not defined) gaining investment returns and tax reliefs (Tax Policy Centre, 2016).

Highest Risk to the employer

A defined benefit retirement plan has the highest risk to…