Since your retirement plan plays an important role in your retirement, you should understand how it will work for you.
What should you know about your plan, and how can you find out? You can learn about all of these things from human resource manager at your place of work.
What should you ask them about? Find out specifically how you will receive the benefits of your retirement plan as well as when you should receive them. Try to obtain any information you can about the details of your plan. You should know which type of plan is available to you and which one you have, and who you should contact if you have concerns about your plan.
There is more information that you should find out about your plan. You should first know if your employer offers a retirement plan for employees since it is up to them. It’s not required by federal law to offer retirement plans. You should also know the details of your plan, including whether you have a defined contribution plan or a defined benefit plan.
Is Your Plan Defined Contribution or Defined Benefit?
The differences between these two plans can get complicated, but the basic difference is this. In a defined contribution plan, you are not promised a certain amount when you retire. Instead of receiving a specific amount, your employer and you, or one or the other, put money into your individual account. You are usually the one responsible for determining how these funds are contributed.
However, in a defined benefit plan, it’s funded by your employer and you get a certain amount each month when you retire. This may be a detailed dollar amount or it might be determined by how many years you worked for your employer.
There are many other factors that need to be considered concerning your retirement plan, like how your benefits are accumulated and when, and when you have the right to access them. All of these things can and should be discussed with your employer, since they are the key in the future of your financial security.
Tags: Retirement Plan