Intro to Retirement Planning
Building wealth with the goal of achieving financial indpendence.
What is Accumulation Phase?
Work period that remains at a given point in time before retirement.
What is remaining work life expectancy (RWLE)?
There are four of these and seven of these.
What are Defined Benefit plans and Profit-Sharing Plans?
Employer is subject to this risk.
What is investment risk?
The contribution limit is defined as XX% of this.
What is 25% of covered compensation (total salary, bonuses, etc.)?
A movement designed to implore people to spend less, save more, and retire early
What is FIRE? (Financial Independence Retire Early)
What is compound interest? (And/or investment earnings.)
The annual contribution limit is any amount within a statutorily defined minimum and maximum range calculated by an actuary.
What are Defined Benefit Plans?
Reduces the benefit to those employees whose earnings are below the Social Security wage base.
What is Social Security Integration Offset Method?
The four types of profit-sharing allocation contribution strategies.
What is standard, social security integration, age-based, and new comparability?
Employees, Employers, Government, Professionals (Institutions)
What are the interested parties in a retirement plan?
The two methods are top-down approach (common sense) and bottom-up approach (budgeting).
What is wage replacement ratio (WRR)?
ERISA protection prohibits any action that may cause the plan assets to be assigned, garnished, levied, or subject to bankruptcy proceedings.
What is anti-alienation?
Pension benefits are based on one of these three defined formulas.
What are Flat amount; flat percentage of salary; and unit credit formula?
Most prevalent type of plan established today.
Cash or Deferred Arrangement (CODA) 401k.
Sources of conflict with money.
What are savers vs spenders, priorities, and undue financial influence?
What is Capital Needs Analysis?
Age 21 and One year of service (1,000) hours.
What is standard eligibility?
These two plans favor younger entrants and this one favors older entrants.
What are Cash Balance and Money purchase pension plans? What are Target Benefit pension plans?
For businesses where the only employees are the owner and/or spouse.
Individual 401k.
These are the six main disorders related to money.
What is compulsive buying disorder, hoarding, gambling, workaholism, financial enabling, and financial infidelity?
The chicken wing method follows four basic steps.
What is determine the amount of funding in today's dollars, then inflate to beginning of retirement, determine the funding needs at retirement, determine the required annual savings amount?
An employee is considered Highly Compensated under these rules.
What is an owner of >5% or someone with compensation in excess of $160k?
Characteristics of Defined Benefit Plans (7).
Requires an annual actuary.
Investment risk borne by employer.
Forfeitures reduce plan costs
Require PBGC insurance
Credit for prior service awarded.
Can use offset OR excess method.
Commingled investment accounts.
When you fail the ACP/ADP test, employers have four options.
What are corrective distributions, recharacterization, qualified non-elective contributions, and qualified matching contributions?