Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, December 3, 2022

It’s Not That SIMPLE—Selecting an Employer-Sponsored Retirement Plan

Bruce A. Tannahill recently authored the article, It’s Not That SIMPLE— Selecting an Employer Sponsored Retirement Plan, ABA Probate & Property, November/December 2022. Provided below is the introduction to the paper:

The “Great Resignation” that resulted from the COVID-19 pandemic has increased the focus on employer-sponsored retirement plans. These plans offer benefits for both employers and employees. Robert Half’s 2022 Salary Guide lists retirement savings plans as both the third most-wanted employee benefit and the third most-offered benefit.

It’s easy to understand why retirement plans are attractive to both employees and employers. Employer-sponsored retirement plans, or simply retirement plans for purposes of this article, include defined contribution plans and defined benefit plans qualifying under section 401(a), Simplified Employee Pension (SEPs) established under section 408(k), the Savings Incentive Match Plan for Employees (SIMPLE) established under section 408(p), and 403(b) plans. For employees, employer-sponsored retirement plans can simplify the process of saving for retirement, and employer contributions increase their retirement savings. Making salary deferrals into an employer-sponsored defined contribution plan allows employees to automate the contribution process. Profit-sharing and 401(k) plans normally offer employees the ability to select from investment options chosen by the plan sponsor, generally with assistance from the plan administrator or its investment advisor. In contrast, contributing to an IRA often requires the employee to take the initiative to make the contribution, either through a one-time contribution, via automated payments from a bank account, or through payroll deduction and choose how to invest the contribution, possibly with the assistance of a financial professional.


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