Defined Contribution Plan

Question: Who can be trustee of a defined contribution plan? Here's the situation: a small business forms a defined contribution plan. They choose one of the business' employees to be the trustee. This person does not invest in the defined contribution plan. Is this person able to be the trustee? Does it matter if an employee is investing in the defined contribution plan?

Answer: Generally the plan administrator or the CFO is a trustee, maybe head of HR... The trustee does not have to participate in the plan if they do not want to, but i don't know why they wouldn't... It would however be wise to consult a broker, so that they can make sure you are in compliance with all regulations and pass discrimination testing with your highly compensated employees vs your lower compensated ones.

Question: How does my company's BK 11 affect my pension plan (defined contribution).........................… My former employer recently filed Bankruptcy Chapter 11. I have a vested defined contribution plan (pension) plan with them for almost 20 years. What are the facts? Anything to worry about? Anything I need to do? Please advise! Thanks!!

Answer: Your employer should have been paying insurance premiums to a company called the Pension Benefit Guarantee Corporation, a government agency responsible for insuring pension benefits. You can visit http://www.pbgc.gov/workers-retirees/benefits-information/content/page13181.html for a complete list of the protections the corporation will provide. You can also call them at (800) 400-7242. You should also check any documentation that is available to you, related to your plan, as defined contribution plans often convey a significant degree of ownership in the deposited funds to you . Is your plan really more of a 401(k)? In that case, you should contact the plan administrator, who will be listed on any recent statements.

Question: do employees get a tax deduction for contributions made to a defined contribution plan?

Answer: Yes, it's non taxable, just as with RRSP contributions. The limit is 18% of earned income. You also get a Pension Adjustment which lowers RRSP limits by a similar amount.

Question: under defined contribution plan how many options should employees be given?

Answer: depends on the company some have 401k others have stock purchase plans some both....then it depends on what company is handling all of this ands what options they have.

Question: A company offers a defined contribution pension plan which means that upon retirement the employee will reciev? A. one half of the employees last year salary B. the total amount of money contributed plus investment earnings C. an amount of money based only on the length of time the employee worked for the company D. a specified amount of money based totally on the profit earned by the company while the employee worked there.

Answer: E - Some amount of money, usually a monthly amount for life. The amount is not dependent on investment earnings nor on the profits earned by the company. Typically (but not always) is it based on employee's earnings and length of employment. Comment: I would question the credentials of any instructor that would limit the correct answer to A, B, C or D.

Question: is defined contribution plan & contributory retirement plan the same thing?

Answer: NO they differ greatly . Defined benefit is spelled out of the amount you will receive after completing so many years of service after a vesting time. it is set up with safety in mind for the individual to protect the participant from loss in most cases. The plan is insured by PBGC.

Question: Who manages the defined contribution pension plan? the financial institutions like banks?

Answer: Generally a large investment advisory company will manage the defined contribution plan. For example Fidelity, TIAA-Cref, Transamerica, Pacific Life, etc. These companies will offer you an array of their mutual funds which you can choose from. The mutual funds will charge fees which will be automatically deducted from your account value on an annual basis. You probably won't notice these fees, they will just reduce how well your investments perform over time. However this is what you pay for the maintenance of your account. Because you are a part of a defined contribution plan and not a "defined benefit plan", the investment risk lies on you. In other words you will need to determine how much income you will need in retirement, how much to contribute annually in order to reach that goal, and which investments to choose in order to effectively reach the goal. If this seems confusing and overwhelming to you, consider talking to a professional investment advisor. (some are good, some are bad though, so be careful and shop around).

Question: The difference between a defind benefit pension plan a defined contribution pension plan?

Answer: A defined benefit pension plan does what it says. It provides a defined benefit in retirement. The plan is based on a formula. This formula is usually a function of your maximum salary and years of work at the company. Because of the uncertain nature of the liability, it is increasingly rare for companies to offer defined benefit pension plans. A defined contribution pension plan also does what it says. A company will make defined contribution into a pension plan on your behalf. Typically it's what you hear of as a 401K plan. Often the contribution is matching amount to what you withold. You can make investment elections to grow that contribution but the company is making no guarantees on how much will be available in that plan when you retire.

Question: Which of the following is not a characteristic of a defined-contribution pension plan?

Answer: How about the rest of the question ?

Question: Distinguish between defined-benefit and defined-contribution pension plans? 1. Distinguish between defined-benefit and defined-contribution pension plans 2. How are insurance companies able to predict their losses from claims accurately enough to let them price their policies such that they will make a profit?

Answer: 1. Defined benefit means you get a defined benefit--it would be something like 2.5% for each year you work. So when you get to 60 you get 50% of your salary if you worked 20 years. Defined contribution is when you put in 10% (for example) of your salary and when you retire you get what is there. 2. Computers and very smart people figure out the risks and costs. The people are called actuaries.

Question: What pension plan offers the most advantages? Defined Benefit or Defined Contribution? Feel free to offer your own opinion about either plans and what you prefer.

Answer: The only real way to tell which is advantageous is to do a mathematical comparison of specific plans. But since most people do not have the knowledge to do this, here are some general guidelines: Defined Benefit is generally better for the employee. The company pays for most or all of it. It is usually especially good for older employees who have accumulated a lot of service with the company. Defined contribution is generally cheaper for the company, but gives the company less flexibility in making contributions and managing the money in the plan. It is also often better for younger employees with less accumulated service. All else being equal, you are better off with this because you get to control how your money is invested in the plan. But because of this, most companies give you less money in a defined contribution plan over time than they would give you in a defined benefit plan. If you are looking for a job and comparing benefits, I would suggest that defined benefit is usually a sign of a stronger benefits package. However, keep in mind that most defined benefit blans have been terminated or converted to defined contribution and there is no guarantee that a plan in place today will be there tomorrow.

Question: Defined Contribution Plans vs. Deferred Compensation Plans? My employer has a 401(a) defined contribution which is after tax. It also offers 457(b) deferred compensation pre-tax. So what are the major differences, other than before or after taxes? Which is better in your opinion? Thanks.

Answer: What Does Defined-Contribution Plan Mean? A retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties. Investopedia explains Defined-Contribution Plan There is no way to know how much the plan will ultimately give the employee upon retiring. The amount contributed is fixed, but the benefit is not. 457 Plan http://en.wikipedia.org/wiki/457_plan

Question: defined benefits or defined contribution? more companies are going for defined benefits plans or defined contribution plans, nowadays ? wats the future of defined benefits ?

Answer: According to the Pension Benefit Guaranty Corporation, there are about 38,000 insured defined benefit plans today compared to a high of about 114,000 in 1985. They go on to state that this decline was due primarily to plans with 100 or fewer participants. One possible reason for this decline is the complexity and cost required by many of these plans.

Question: Does the UK have a 401k like plan in place? A 401k in the US is an employer sponsored plan where contributions are paid by employee and sometimes by employer, into a fund whichinvested in financial assets. This is a form of a defined contribution plan. Withdrawals occur after age 60 at any time and amount.

Answer: In a way yes, but it's not one plan or company that you pay into. We have two ways of paying into a pension in the UK: You can take out a private pension plan with a private company (and there are quite a few) that can be moved around no matter what company you work with and you pay a contribution and your employer pays a percentage into that and once you turn 60, you are paid every week or month from that fund. BUT on top of that we ALL pay National Insurance contributions and Income tax as standard through our wages every month and that National Insurance goes to pay for your *state funded* pension at 60 and also pays for welfare/benefits you or anyone else may need over their lifetime. ALL National Insurance and Income tax pays into ONE pot which pays for everything. When you get to 60, providing you have paid a standard number of years of National Insurance, you will get a state provided pension every week. You still have the option of paying into a private pension as well and many do because generally a state pension is not enough to live on or if it is, it's a basic living. Most people here try to pay into a private pension as well but they will also get some state pension once they turn 60. If you have never paid into a private pension, you will still get a state pension from all the National insurance you have paid over your working life but it's not a huge amount to live on. IF you have not worked much and have no got enough NI contributions your state pension will be at the very very low end and you will need to claim a state/welfare benefit to top up that income. So the more NI years you pay in the better the pension from the state, though of course value of that pension can go down because of inflation and higher living costs. More and more people in the UK are being urged to pay in as much as they can with a private pension plan due to uncertainty over state welfare for the future! Many pensioners who are now just getting their state pensions are finding it hard to live on, even if they have worked their whole adult lives hence why younger people are being urged to take on private pension funds. Some companies will not have a particular pension fund to pay into, which is why most people like to find their own one that they can move around if they move jobs! Does that answer your question?

Question: What resourses are available to figure how much of a 401k contribution it would take to replace a pension plan What resourses are available to figure how much of a 401k contribution from the company it would take to replace a defined benefit pension plan ?

Answer: In other words, you want to know how much is the stream of payments worth today in a lump sum. This is a really simple calculator that can tell you what that stream of payments is worth as a lump sum. http://www.deseretfirstcu.org/calc/pvann… The two main variables are, what interest rate is the company using and how long is the stream of payments? If the stream of payments was going to be for lifetime, you would have to know what age their actuarials came up with for their calculation. I hope this helps. Good luck.

Question: What is the difference between Defined Benefits and Defined Contributions Retirement Plans?

Answer: With a Defined Benefits plan you'll get a certain amount of money each month starting at retirement for the rest of your life. With a Defined Contributions plan you get so much money to invest each month now. Depending on your investment skills, the amount of money you'll have at retirement could be huge or tiny. Defined Benefits plans were the norm years ago, people only worked for a single company for 30 years, retired and got a pension. Defined Contributions plans (like 401K) are now more common. If you invest wisely and never take any money out, at retirement you could end up with more money than you'll ever spend. However, if you don't participate in the 401K, take early withdraws (or loans) or invest only in money market funds, you could end up with very little at retirement.

Question: Can a company change a defined benefit pension to a defined contribution one without consulting it's members ? This is for a befined benefit pension plan in the rep. of Ireland

Answer: I would be very surprised if they could change plans, e.g. close one and transfer funds to the other. What they are likley to be able to do is to close the plan for new entrants or to close the plan but keep the DB fund to be payed out at retirement. Members would then need to join a DC plan for future funds.

Question: Hensarling unveils the "new" Repub plan to cut Social Security and sell it to the corporations? In the name of deficit reduction, House Republicans are going back to the Social Security well, offering budget proposals similar to those President George W. Bush proposed after his 2004 re-election that would privatize Social Security accounts and reduce cost of living adjustments. Rep. Jeb Hensarling (R-TX) appeared on Hardball tonight and advocated balancing the budget by privatizing Social Security and cutting benefits for those now under 55. "You can get better health care and better retirement security if you go to a defined contribution plan. We had this debate in Social Security a few years ago," Hensarling said: full video. http://tpmlivewire.talkingpointsmemo.com… http://www.youtube.com/watch?v=qQW0oacbO…

Answer: "privatizing Social Security and cutting benefits for those now under 55" Are you paying attention, young people? That's what Republicans want for you. "Oops, we lost your Social Security money in the market, sorry. Oh, and less bennies for you. We the wealthy win again, and you the schmuck gets mowed over again. Thanks for playing!" ##

Question: US Citizens- Do you prefer participanting in Defined Benefits or Defined Contributions pension plans?And Why?

Answer: Both have their advantages as long as the defined benefits plan is backed by a guarantee that its promises will be fulfilled, then a combination of both a defined benefits and a defined contribution plan is optimal for many people in my opinion.

Question: Do you believe pERS and other defined-benefit retirement systems for public eployees are in need of any signif Do you believe pERS and other defined-benefit retirement systems for public eployees are in need of any significant changes? What are your views on a defined-benefit versus a defined=contribution retirement plan for public employees?

Answer: PERS is a working system and one of very few with sufficient funds available. It ain't broke, so we better get in there and fix it til it is. Every time we get a spender in the Governor's office, they take one look at that big pot of money, begin to salivate, and spend the rest of their term trying to figure out some way to get their hands on it. Alaska has a thing they call the permanent fund. It too is a large pot of money whose interest is used to provide Alaskans with an annual check. The fund was derived from taxes generated during the building of the Alaska pipe line. Their Governor makes a run at that pot about once a decade. All we have to do is go to sleep for 30 seconds and one of these bozos will rape these reserves and the state will have the same problem the feds have with social security.