401計劃對用人單位和勞動者的優勢和劣勢 Advantages and Disadvantages of a 401k plan to the Employer and Employee
 
 
這個401(k)計劃是雇主和勞動者所提供的一個退休賬戶，在這個賬戶上稅收可以一直延期直到被撤回，而且勞動者也可以為其選擇不同的投資類型。由于這方面的事情都牽涉到國稅局，401（k）計劃有許多跌宕起伏，很多法規必須遵循。這使雇主和雇員在做一些與計劃有關的抉擇時變得更加困難。我們得看到計劃的兩面性，那就是它的利和弊，以此來揭示在用此計劃時都包含了什么。我們來對比一下把此計劃作為員工的一種選擇的兩家重要的公司，并權衡其特定計劃的優點和缺點。至于401（k）計劃是否是確定要走的路。有了這個信息，事情變得更加清晰。

首先，我們來看一下對對雇主優勢，把這個計劃是不是值得提供給他的員工。計劃的低成本是的其變得非常理想劃。因為沒有任何雇主是貢獻都是必須的。因為計劃的資金完全可以從你的員工的薪水里扣除，公司沒有任何歸屬選項，除非他們自己想，如果他們認為他們的員工不能發現歸屬感如此重要的話，那么他們會為員工制定計劃，這樣做只是讓員工有一種方便的感覺。

很多公司都開始使用這個計劃，因為它很受歡迎，而且可以幫助他們吸引和留住員工，很多大學生也對退休計劃也更熟悉。也會以公司所提供的報酬作為選擇一家公司工作的基礎，這個計劃能夠為公司帶來這樣的大學生，所以對企業來講，當雇傭員工時，能考慮到類似401(k)這樣的退休計劃，是非常重要的。另外，每年給員工提供歸屬感，可增加員工對公司的忠誠感，這樣可以使員工留在公司的時間更長，降低離職率。

A 401(k) plan is a retirement account to which employee and employer contribute, on which taxes are deferred until withdrawal, and for which the employee selects the types of investments. As with anything to do with the Internal Revenue Service, the 401(k) plan has many ups and downs and many regulations that must be followed. This makes things more difficult for both the employer and employee in making decisions about the plan. We have taken a look at the advantages and disadvantages of the plan from both sides of the table to show what all is involved in deciding to use a 401(k) plan. We then give a comparison and contrast of two major companies that use this plan as an option to their employees, and weigh the good and bad points of their particular plan. With this information it makes things a little clearer as to whether or not a 401(k) plan is the definite way to go.

First, we take a look at the advantages to the employers to see if it is worth it for them to offer this plan to their employees. The low cost of the plan makes it very desirable. No employer contributions are necessary because the plan can be entirely funded with contributions from your employees’ salaries. Companies do not have to offer any vesting options, unless they want to. If they believe that the employee does not find vesting to be that important, then the employer can just basically set up the plan for their workers and that alone gives the employee a since of convenience. #p#分頁標題#e#

Many employers’ set up 401(k) plans because they are popular and offering one may help them attract and retain good employees. Many college students today are more familiar with retirement plans and may chose to work for a company based on benefits the company may offer. A 401(k) plan could bring these college students to an employer, so it is very important for employers to think about the effects of a retirement plan such as the 401(k) when considering hiring employees. Also, by offering vesting to their employees for each year that they work, there could be increased company loyalty. This could make workers stay at a company longer and decrease the turnover rate.

 A case in point is a regional restaurant chain with more than 40 locations, with each location employing more than 100 people. After instituting a modest 20 percent matching 401(k) plan, employee loyalty and longevity increased substantially. The reduction in employee turnover was especially crucial during peak seasons when extra help was needed. The owner says the 401(k) cost is substantially less costly than employee turnover costs  .That is why it is important to consider providing retirement benefits to part-time and full-time employees. This will help to ensure that a pool of trained, reliable workers will be eager to return to your company whenever you require extra staff.

401(k) plans can also increase productivity. A retirement plan can improve morale, leading to more willing employees. This gives the workers a sense of security when they know that they are working to make money now and for the future.  It makes the company look “more caring” to their employees, which always can make a big difference in how dedicated someone is to their work

A 401(k) plan also has the advantage of having optional employer contributions. The employer can contribute to the plan through matching or profit sharing contributions. A profit sharing plan is when profits are paid directly to employees in cash, check or stock as soon as profits are determined. It as a plan established and maintained by an employer to provide for the participation in its profits by its employees or their beneficiaries. Company contributions may be determined either by a fixed formula or at the discretion of the board of directors.  A matching profit sharing plan designed to provide benefits upon retirement are based strictly upon the sum total of the contributions made and the investment results therein. The plan must provide a definite predetermined formula for allocating contributions made to the plan participants.

 The optional employer matching contributions or profit sharing contributions also reduce the company’s tax liability. When you have a choice, it is better to save money within a tax-advantaged retirement plan, compared to outside of one. IRAs, 401(k)s , 403(b)s and other employer-sponsored plans are all considered tax-advantaged by the Internal Revenue Service. All contributions grow tax-deferred until they are withdrawn, which means that money will grow faster then in a currently taxable investment earning the same rate of return. If you need your retirement assets now, and are prepared to pay the tax bill that results, you may ask your employer to pay them to you in a check. However, before you do ask for a check, you may want to compare the impact of paying taxes today versus continuing to defer taxes .#p#分頁標題#e#

Many companies offer benefits to decrease turnover rates. According to a survey done by , around 30% of most companies offer attractive benefit packages so  they can reduce employee turnover*. The vesting option of a 401(k) can reduce expensive turnover and save the company money because they will not have to retrain and recruit applicants .

In addition, employers should also be aware of the flexible plan designs that 401(k) plans offer. It can be designed to meet the precise needs of their company. Employers may offer such provisions as plan loans, or allow employees to select their own investment .

Second, we looked at what attracts people to companies, the advantages to the employee, and case 401(k) benefits. Normally, employee contributions to 401(k)s are deducted before taxes are taken out. There are five major reasons why 401(k)s are a smart idea for the employee. They are as follows: automatic payroll deductions makes it easy to save, you can increase your take home pay, a company will match your contribution, easy access to money in case of an emergency, and your money can roll over as an IRA or from job to job.

Automatic payroll deductions make it easy to build a retirement nest egg with affordable deductions. 401(k)s make saving convenient because the money comes directly out of your paycheck before you ever see it. This helps you make saving a
priority. Also you do not see the money so you are not tempted to spend it.

Tax savings and Tax deferred plans help you increase your take home pay.  The reasoning behind this type of planning is to increase your take home pay and decrease your taxable income (Beam, 669). You should not think you are getting away scott free, because tax deferred does not mean tax free, but really means that you pay the tax when you withdraw it.  This chart will help you see how having contributions tax deferred can be advantageous.

Contributing to your 401(k) on a pre-tax basis helps you increase your take home pay Pre-tax savings in the plan  Saving in a taxable account outside of the plan

Annual gross salary  $50,000  $50,000

6 percent of pay before-tax contribution  - 3,000  0

Less 27 percent Federal income tax  -12,690  -13,500

6 percent regular annual savings in a taxable account outside the plan (from gross salary)  0  -3,000

Annual difference in take home pay  $810   

This is a hypothetical example. Actual results may vary depending on your individual tax situation and taxes will be due when you withdraw funds from your plan account.

Another example, “If you were 40 years from retirement and begin contributing $2,000 a year to a 401(k), that money would grow quickly. Say your investment options offered an annual return of 10 %, and you contributed faithfully every year.  At the end of 40 years, you would have contributed a total of $80,000. But your 401(k) account would be worth $973,684, thanks to the power of tax-deferred compounding”  #p#分頁標題#e#

Now, we move on to how a company will match either all or a percentage of what you contribute to your 401(k).  There are a number of requirements that need to meet to qualify for employers’ to match your contributions, such as work a certain number of years. This is a good way to increase your savings, because if the requirements are met and the employer matches your contributions, you can take advantage of your increase in savings.

Most 401(k) plans are designed to help you when you need it most, at retirement of course, but also in case of an emergency. There are two ways you can dip in to your account, that is if your plan allows you to do so loans, and withdrawals. First, loans are basically taking money out and promising to repay it. However, you must pay back what you borrowed plus interest with after-tax income, whereas withdrawals are completely different. When you make a withdrawal from your account you cannot put it back. The most common withdrawal is the hardship withdrawal. To qualify for this type of withdrawal your hardship must represent an immediate financial need. It would be wise, if you can help it, to take out a loan instead of a withdrawal because a lot of times with withdrawals you have to pay income taxes, and a possible 10 % withdrawal penalty.

Now, we will discuss the final main advantage to the employee contributing to a 401(k).   Of course now days people are worried about starting a 401(k) plan at their first job, because the job market is very different than it used to be. So one of the big advantages to employees is the fact that most plans allow you to roll over your savings. According to 401k.com, “if you decide to change jobs, you have three options for your money: your balance can be rolled over into a conduit IRA or another 401(k) plan, you could keep your old account and start another retirement plan account with your new employer’s plan, and you could also directly roll your old 401(k) account to an individual retirement account (IRA) and start a new retirement plan account with your new employer.” There are advantages to each one of these three options. The first would be you could consolidate your accounts, which could be easier for you to keep your records.

The second options benefit would be that each plan might offer different investment options, giving you more choice. The third and final options benefit would be, through an IRA, you may have even greater choice for investing your money.  Now we will look at the disadvantages of 401(k)s on both sides of the spectrum, the employer and the employee.

Many employers today have some sort of a 401(k) plan in effect. An employer is one of the few who does not have a plan offered this can make his or her company less attractive to some of the top employees and may effect their recruitment of such talent.

Another disadvantage has to do with matching what your employees put into their 401(k) plans.  Although the employer has the option of not matching anything, doing this it would once again make the company less attractive to employees.  The match can be less than what the employee puts in .Basically an employer must decide if the benefits outweigh the cost of vesting in a 401(k).#p#分頁標題#e#

The vesting period of course determines when an employee is able to take part in the 401(k) plan.  This can be very tricky for a employer. You have to make sure it is not too long where you limit employee interest or too short where you diminish the value of your plan.

These figures will show the different lengths of vesting periods

 Companies must choose what stocks people will be able to invest in with the plan. The main disadvantage here is that the company is legally responsible for this.  If the employer makes some bad decisions that cause the employee to lose their savings, then they are looking at a lawsuit as well as a bad reputation for their company. However, the company can elect a plan trustee who in turn can work with a professional investment advisor and together go over the companies choices and determine the best options.

Over half the 401(k) plans allow people to borrow from the plan with a figure of about 25% of people taking advantage of this option.  Once again it is up to the employer to choose if this option will be included in the plan. It is the employer who will also have to decide the terms of the loan. This can put some burden on the employer and may require them to hire another employee to handle the loans. This adds a cost to the company and is definitely a disadvantage .

One other problem with a 401(k) plan is that the features of the plan can taint the need for employees to provide for their retirement, because under certain conditions, the money can be loaned or distributed in hardship situations. This could give your employees false sense of security and they could blame it on your company when they realize that they are not going to be able to meet retirement needs

As one can see ,the main disadvantage to the employer is all the choices that go into making a 401(k) plan. If you make bad choices when compared to the competition, you make yourself less attractive to potential talent. 

Record keeping can be a very big disadvantage to an employer offering the 401(k) plan. The cost can become very high and  requires the organization to hire new employees to handle this job, not to mention that if they mess up somewhere it could cause many problems. They might lose some of the employee’s money,or give them more than they should have. The problems that could occur are endless. Another similar disadvantage that is related to record keeping is you must perform a yearly non-discrimination test. This test is run to make sure that your 401(k) plan does not discriminate in any way at all. There are also some disadvantages to the employee. These disadvantages must be looked over before deciding whether or not to take part in investing in a 401(k) plan.

For the most part, 401(k) plans are relatively safe, unfortunately, they are not backed by any insurance, and that means the contributing employee could ultimately lose all their 401(k) holdings. This,however, is very unlikely considering that most 401(k)s are diversified. By diversity, one is referring to the number of different holdings within the 401(k) that are required. The Federal government requires that employers’ give all employees at least three choices in which they can invest, not including the company for which they work. Thus, most 401(k)s are safe, unless an investor/employee has contributed an extensive amount to one particular company. Say for instance that the employee has contributed a large part of his or her savings towards the company in which they work. If that company happens to go bankrupt, or fail, that employee has lost a large portion of his/her retirement. In a worse case scenario, like the one mentioned above, one might be a little hesitant when i!#p#分頁標題#e#

t comes to investing in a 401(k) plan. However, one has to also consider that nearly every money market has its own similar risk. The important thing to remember, when investing, diversify among investments. Financial investors recommend investing in stocks, bonds, and T-bills. Thus the employee, in cases similar to the one mentioned above, has something to fall back on (Pink, 93).

Another disadvantage to 401(k) is the employee’s inability to spend the money they have invested in the plan. Money can be withdrawn from the account, but one must have a hardship to make a withdrawal (i.e., a death of spouse, or on the verge of losing ones home). The reason one considers this to be a disadvantage is because of the investors inability to have full control over his or her investments. This is compared to an employee who opted not to invest in a 401(k), but rather to take it upon him or herself to invest in stocks and bond. By doing so, that individual could have access to that money at any point in time, as compared to only being able to withdraw money from a 401(k) at the age of 59 and ?, or in cause of hardship  .

For the most part, the disadvantages are relatively insignificant if one is comparing it to all the advantages. For most employees, the need to withdraw money from their retirement plan is none existent. If money is needed, one can always borrow money and pay it back at a later time. However, the employee should seriously consider the scenario of a company going bankrupt. Take Enron for example, many of the employees who had worked for Enron for 20 or more years, and were at or near retirement age have lost all, if not most, of the money they had invested in their 401(k). Now instead of living off of the money they and Enron had invested into their 401(k) plan, many people will have to start over.

After deciding that 401(k) plans are a safe investment for both employers and employees we decided to take a look at two well-known companies in this area. We researched the 401(k) plans for Acxiom and Alltel to see if they had any major differences that made one look more appealing than the other.

Acxiom offers a 401(k) plan that is basically a “salary reduction plan.” Under this plan you may choose to reduce your compensation and have these amounts contributed to the plan on your behalf. Also, Acxiom intends to make contributions to you and other eligible associates. Then, when you retire, you are eligible to receive the value of the amounts that have accumulated in your account.

Once you become a participant of the plan you may elect to defer up to 22% of your compensation each year instead of receiving the amount in cash, however, you cannot defer more than the legal limit, which is now $11,000. If you are what is considered a highly compensated associate (generally owners, officers or individuals receiving excess of certain amounts established by the Internal Revenue Code), the administrator may limit your election in order to meet certain nondiscriminatory requirements under the IRS code.#p#分頁標題#e#

Distributions from your elective accounts are not permitted before the age of 59 ? except in the event of death, disability, termination of employment, or reasons of proven financial hardship.

Acxiom will also contribute to your plan based on this vesting schedule:

They offer ten different funds to choose from that offer varying levels of risks. Over all Acxiom seems to cover all the bases and offers a very well rounded plan.

There is one major difference between what Alltel offers and what Acxiom offers in form of company 401(k) plan. Alltel offers many of the same benefits that Acxiom offers. Here is an overall summary of the plan: 401(k) plans provide a savings incentive for all employees using pretax dollars to help prepare for retirement. The amount you contribute is deducted from your gross earnings, which decreases your taxable income. A participating employee will have on-line and telephone access to change or view their contributions.

You are 100% vested in your employee contributions and any company contributions at all times. You may direct the investment of your money and company contributions among several investment options.

Here are three ways that Alltel will contribute to what you will put in your 401(k) account; Qualified Non-elective Contribution (QNEC), basic employer matching contribution, and additional employer matching contribution. With he first one (QNEC), the company will contribute one percent of plan compensation. The second, basic employer matching contribution state that the amount contributed is determined year by year by the employer. Traditionally, they contribute six percent of annual plan compensation. Third, Alltel offers additional employer matching contribution, Alltel may provide an additional matching contribution to employees who made salary deferrals in excess of three percent of their compensation for that year.  

Employee Contributions ($) $0 $1,350 $2,700

QNEC (1% of Eligible Pay): $450 $450 $450

$0.25 Basic Matching Contribution $0 $337 $675

$0.12 Additional Matching Contribution over 3% $0 $0 $162

Total Company Contribution: $450 $787 $1,287

In addition to its primary purpose as a retirement savings plan, you may also use the 401(k) plan for a personal loan or in-service withdrawal to help pay for certain expenses in limited circumstances

One difference that Alltel had over Acxiom is that it offers 13 different funds to choose from, which gives the employer more choice. I consider this to be an advantage over Acxiom’s plan. When it comes down to it, the companies’ plan were both very similar and probably would not make that much a difference as to whether or not a future employee would pick one over the other.#p#分頁標題#e#

The companies’ plans were both similar, with the exception of companies

contributions to your plan. Alltel offered more variety in the way that they contribute to your plan. Acxiom was more straightforward on the amount that they would contribute to your plan. Overall, Acxiom’s plan was more straightforward in the amount they would match as compared to what you put in the plan.

If one finds it difficult to determine whether to invest in a company’s 401(k) plan, or to take it upon him or herself to set up their own retirement package, that is because each individual employee has different needs and expectations. The decision to choose can be become even more difficult if that individual’s company offers matching contributions. In a situation such as this, the employee will have to determine what is better for himself or herself in the long run. Investing money in a 401(k) will not harm ones assets if one remembers to diversify and not rely solely on their 401(k) contribution for retirement. In doing so, the disadvantages to employees are greatly reduced, thus making the disadvantages insignificant, as compared to the enormous advantages.