NOTE: This is the older version of this content. The more recent version, which features more up to date materials and improved audio quality, can be found here:

This lesson is based off of Chapters 29 & 28 of the text for Finance 418. Professor Bryan Sudweeks of Brigham Young University teaches this lesson.

All lesson materials are available online at:

Objectives:
1.  Understand Employer Qualified Retirement Plans
2.  Understand Defined Benefit Plans
3.  Understand Defined Contribution Plans
Objectives:
1.  Understand the difference between the traditional and Roth IRA
2.  Know when a conversion to a Roth makes sense
3.  Understand individual retirement accounts (IRAs)
4.  Understand retirement plans (QRPs) for the self-employed and small businesses…(read more)

LEARN MORE ABOUT: IRA Accounts

CONVERTING IRA TO GOLD: Gold IRA Account

CONVERTING IRA TO SILVER: Silver IRA Account

REVEALED: Best Gold Backed IRA

retirement planning is an important aspect of financial planning. It is essential to plan for retirement as early as possible to ensure financial security later in life. This involves careful consideration and understanding of the various retirement plan options available, including qualified employer plans, individual plans, and small business plans.

Qualified employer plans are retirement plans that employers establish and maintain for their employees. They are subject to the Internal Revenue Service (IRS) rules and regulations, which include minimum coverage standards and vesting requirements. These plans come in two types: defined benefit plans and defined contribution plans.

Defined benefit plans guarantee employees a specific amount of financial benefits upon reaching retirement age. These plans are typically funded entirely by the employer and have a set formula for calculating the benefits amount based on factors such as salary and years of service.

Defined contribution plans, on the other hand, are funded by both the employer and employee. The employer typically makes a set contribution amount on behalf of the employee, and the employee can also make voluntary contributions. The benefits of defined contribution plans are based on how much money is accumulated in the account and how well the investments perform.

Individual plans, such as Individual Retirement Accounts (IRAs), are a type of retirement plan that individuals establish and maintain on their own. These plans offer tax benefits, including tax-deferred growth and tax-free distributions during retirement. The two types of IRAs available are traditional IRAs and Roth IRAs.

Traditional IRAs allow individuals to make tax-deductible contributions, and the money contributed grows tax-deferred until withdrawn during retirement. Roth IRAs, on the other hand, require individuals to make after-tax contributions, but the money withdrawn during retirement is tax-free.

Small business plans are retirement plans that small business owners establish and maintain for their employees. They provide a tax-efficient way for employers to recruit and retain employees, and also offer tax benefits for the employer. These plans come in several forms, including simplified employee pension (SEP) plans, savings incentive match plans for employees (SIMPLE) plans, and 401(k) plans.

SEP plans offer tax-deductible contributions for employees and employers, and the contributions are immediately 100% vested. SIMPLE plans allow employees to make pre-tax contributions, and the employer can make matching contributions up to 3% of the employee’s compensation. 401(k) plans offer employees the ability to make pre-tax contributions, and the employer can choose to make matching contributions.

In conclusion, retirement planning is an essential part of financial planning, and understanding the various retirement plan options available is crucial for making informed decisions. Qualified employer plans, individual plans, and small business plans offer different advantages and tax benefits, and it is essential to consult with a financial advisor before making any decisions about retirement planning. By starting early and making wise choices, individuals can ensure a secure financial future and a comfortable retirement.