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Henry Wooster meets with the employee benefits manager to discuss enrolling in the company’s 401(k) plan. He finds that if he enrolls, he must choose the amount of salary to defer and also direct his fund investment. Having no college education and no business experience, Henry lacks confidence about making these decisions.
The law firm of Dunham, Chapman, & Hart has five employees. Following is information regarding these employees:
The partners talked to Rollings Benefits Consultants about the best-qualified pension plan for the firm in light of their major success in and anticipated growth in profits in the coming years. Rollings Benefits created a presentation of a possible plan that showed the maximum possible contributions for the highly paid employees (the partners). Under this proposal, what qualified plan do you think Rollings Consultants suggested to Dunham, Chapman, & Hart? The objective is to give highly paid employees the highest possible contributions. Explain the proposal.
The VA Regional Bank employs 5,300 full-time employees. It is a privately owned corporation that was established in 1972 and has been very successful, despite the recession, because of the conservative investments of the owners. All employees work at least thirty hours a week. The management team has expanded and now includes 830 highly compensated employees. The VA Regional Bank has had an established traditional integrated defined benefit plan for the past twenty years. Despite its major success, management decided to follow the lead of converting traditional defined benefit plans to cash balance plans. There are many good reasons to do so, but management is worried about the impact on some segments of its work force. In a survey they conducted, they saw a high level of resistance by many employees. The case has been a topic of much discussion in the media and in Congress, and it is under the jurisdiction of the 2006 Pension Protection Act. Respond to the following:
The following table shows the five employees of the law firm of Tayka, Mooney & Ruhn, plus some information about each.
The Children Dentistry Place is a successful fifteen-year-old professional firm with five employees. Following is information regarding these employees (note their ages):
|Employees||Age||Salary||Years of Service||Position|
The firm is interested in establishing a defined contribution pension plan. Because the business is doing so well, the top employees want to maximize the contribution for themselves but not for the other employees.
Prepare a matrix comparing the differences among the following:
Make sure to include the following: