A new employee, with spouse and two children, 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 in her retirement account. Your organization has a cafeteria style Benefit plan.
Compare the following retirement options for this particular employee in 900 to 1,200 words: (a matrix would work well here- apiw1000w. See grading guide).
401(k) – Defined Contribution (+25% matching)
Pension – Defined Benefit
Annuities
IRA
ROTH IRA
Company stock plan (ESOP)
Estate planning
Determine which retirement option(s) you would choose if you were this employee. Explain why.
Assess the factors this employee should consider when selecting a retirement plan.
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