1. CHAPTER 10 PART I EMPLOYER-SPONSORED RETIREMENT PLANS MGT 4543 – Compensation Management

2. Exploring retirement plans  Explain the three design configurations Pension Programs can take:  defined benefit  defined contribution  hybrid

3. Exploring retirement plans  What is the primary law that governs pension programs?  What are qualified pension plans and nonqualified pension plans & what type of tax treatment do they get (see Glossary)?

4. Exploring retirement plans  What is the trend in retirement plans: defined contribution or defined benefit plans?  Why has there been a shift in the type of plan offered?

5. Qualified Plans  What does “vesting” mean? (see glossary)?  Compare cliff vesting to graduated vesting.  What are accrual rules?

6. Defined Benefit plans  What is a defined benefit plan?  Are employer contributions the same every year or do they fluctuate?  Under a defined benefit plan, what are annual retirement benefits usually based upon?  What type of requirement does ERISA have for minimum funding standards?

7. Defined Contribution Plans  Under a defined contribution plan, how are employer contributions determined?  Are benefit amounts guaranteed for this type of plan?  What is forfeiture?  What is a fiduciary?

8. Types of Defined Contribution Plans  Explain each of the following  401K  Profit-sharing  Stock bonus plan  ESOP

9. Class activity: MSU Retirement ORP vs. PERS  Read the ORP/PERS handouts & answer the following questions: 1. Why did MSU decide to offer an ORP? 2. What are the two retirement options at MSU? 3. Which plan (ORP or PERS) is a defined contribution plan? 4. Which plan (ORP or PERS) is a defined benefit plan?

10. Class activity: ORP vs. PERS 5. Who bears the risk of the ORP? Of the PERS? 6. What happens if a MSU employee does not enroll in a retirement plan within a month of employment? 7. How long does it take to vest under each plan? 8. What will your retirement benefit be worth under the ORP? Under PERS? 9. Which plan allows for COLAs? Which does not?

11. Class activity: ORP vs. PERS 10. What vendors can a MSU choose from if they elect to have an ORP? 11. Is the ORP considered a qualified plan? Are contributions to it tax deferred? 12. What is the maximum a MSU employee under age 50 can contribute annually to the 403(b)? 13. Are contributions to a 403(b) tax deferred? 14. Why do you think employees are interested in tax deferred plans?