ACCT 3200 Lecture Notes - Lecture 1: Defined Contribution Plan, Sep-Ira, Ordinary Income
Document Summary
Can be discriminatory (discriminating in favor of the highly compensated) Deferred compensation plans, bonus deferrals, etc. for senior executives. Deferred compensation plan: must have a risk associated or forfeiture (must stay with company for x number of years, or lose money if company goes bankrupt) Bonus deferrals: company keeps money and invests it for you. Must also be available to a broad cross-section of rank-and-file employees. Two main type of qualified plans: defined benefit plan and defined contribution plan. Benefits are fixed, based on a set formula. Maximum benefit available in 2014 is ,000. Employers carry a long-term liability on their books and bear investment risks. Funding requirements are not fixed they will depend on actuarial assumptions, history of investment gains and losses and employee turnover rates. 5-year cliff vesting: if you leave the company any time up to 4 years and 364 days, any money that you put with the company is forfeited by you.
