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 previewA defined benefit retirement plan has the highest risk to the employer. The employee bears all the risks to ensure that the employee receives the amount set. The costs of administration for this plan are equally high since complex actuarial projections are needed as well as insurance for a guarantee. Defined contribution plan has a lower risk to the employer than defined benefit plan. In a defined contribution plan once the contribution is made the employer has no any obligation for the performance of the account and enjoys some tax benefits[506 Words]