Advantages and Disadvantages of a 401k plan to the Employer and Employee
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,
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Approximate Word count = 3713
Approximate Pages = 15 (250 words per page double spaced)
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