A new employee joins your company at age 24 making $40,000 per year. Currently, banks are paying 5% interest on saving accounts, and the rate of return on the company stock is 4% per year. During benefits enrollment, the employee stated that she would like to retire at age 60 with 3 million dollars in her retirement account.
Compare the following retirement options for this particular employee in 1,050 to 1,400 words:
- 403B
- 401K
- Pension
- Annuities
- IRA
- Estate planning
Determine which retirement option(s) you would choose if you were this employee.
Assess the factors that this employee should consider when selecting a retirement plan.
Format your paper consistent with APA guidelines.
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Answer preview
The first retirement plan that an employee can opt is known as 403(b). It is a type of tax-sheltered retirement plan which is almost like the 401(k) plan. 403 B plan is eligible for employees which include those from governmental organizations, religious groups, and nonprofit companies. Also, employees from companies which are exempted a certain amount of tax qualify for this retirement plan (Lobley, Baker, & Whitehead, 2016). The benefits of opting for this type of plan include. First, the income or gains in this type of plan are usually not taxed until an individual employee begins making withdrawals and that means when she has retired. Secondly, the employees on holding this type of the retirement plan do not pay income tax until they begin making withdrawals. Also, the savings grow without being taxed.
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