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  1. ERISA - Employee Retirement Income Security Act of 1974. Protects a persons
    retirement/pension with stringent laws that must be followed.
  2. Qualified Plans:
    (registered with IRS and tax favors)- 401K, 403 b, Roth Ira, Keith Ira
  3. 401(k) -
    Contributions on a pre-tax basis and therefore taxed when withdrawn. Employers may contribute.
  4. 403(b) -
    Employees of a 501©3 organization such as, Educational, Religious, Charitable, etc.; tax free until withdrawn. Invests only in annuities and mutual funds.
  5. ROTH IRA -
    Not tax deductible but tax free when withdrawn. Can contribute up to a certain amount per year.
  6. Keogh IRA –
    For Self Employed persons. Can be a profit sharing or money purchase plan.
  7. Non-Qualified Plan:
    (not registered and no tax favor for employer)-457 plan
  8. 457 Plan –
    State & local government employees or of tax exempt organizations.
  9. There are Defined Benefit/Defined Contribution Plans such as
    Corporate Pensions and Profit Sharing plans. The contribution is specific and tax is deferred.
  10. Vesting =
    Money that is contributed by an employee belongs 100% to the employee and when terminated, goes with them. The employer contribution is vested over time; typically 7 years.
  11. ESOP =
    Employee Stock Option Program
  12. Workers pay about 6.2% of their
    salary into Social Security (FICA) and employers must match this amount.
  13. High wage earners do not pay
    Social Security on any income over the “taxable maximum”. It is also known as the Old Age, Survivors and Disability Insurance program (OASDI).
  14. To receive benefit at retirement, a worker must have been employed and paid SS for 40 quarters (10 years). These are called “work credits”. Payment may also be made to a surviving spouse or dependent children or dependent parents.
    Death Payment of $255... Wage is based on your lifetime earnings that have been FICA taxed as well as current averages.
Card Set:
2013-05-20 20:31:43

Exercise 7
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