IRAs and Multiemployer Retirement Plans
IRAsIRAs are individual retirement accounts that allow anyone with earned income to save for their retirement. The money grows tax-deferred and can compound more quickly than in a taxable account.
You can open an IRA online in 15 minutes or less. If you have not saved for retirement recently, consider opening an IRA. If you are under age 49, you can contribute as much as $5,500. The contribution limits increase every couple of years.
In addition to holding mutual funds, IRA holders can also hold stocks, real estate, collectibles, and stamps. However, collectibles such as gold and other bullion are classified as collectibles under IRA statutes.
Some IRAs offer tax-free withdrawals in retirement. These accounts offer more investment choices than 401(k)s, and can be used to supplement an employer-sponsored retirement plan.
There are also Roth IRAs, which invest after-tax money. A Roth IRA does not have employer matching contributions. However, you may be able to deduct your contributions as a federal tax deduction.
IRAs are easy to open, and can be accessed by anyone with earned income. You can even contribute money to an IRA for a spouse who does not have earned income. In addition, you can contribute up to $5,500 to an IRA if you are under age 49.
You can also contribute to a SEP IRA. These accounts are available for businesses with fewer than 100 employees. SEP IRAs make it easier to set up a retirement savings plan. Unlike 401(k)s, SEPs are not tied to an employer's plan.
The Internal Revenue Service offers many resources to help you learn more about IRAs. You can also visit their website to learn more about how to open an IRA. In addition, the Bureau of Labor Statistics (BLS) provides the National Compensation Survey (NCS) for employers, which will provide information on payroll deduction IRAs.
Multi-employer plans
Approximately 10.9 million workers participate in multiemployer plans. These plans are administered by a board of trustees and typically involve two or more unrelated employers. There are more than 1,400 multiemployer plans covering a variety of industries.
The concept of multiemployer plans dates back to the early 20th century. They were designed to encourage more small businesses to offer retirement savings plans to employees. Many workers in unionized industries have benefited from these plans. However, due to global competition and automation, the number of workers in these industries has decreased.
The Department of Labor recently published final regulations regarding the sponsorship of multiemployer plans. Trustees of these plans are required to act in the best interest of plan participants. However, they also need to consider the collective bargaining nature of these plans.
Unlike single employer plans, multiemployer plans have an equal amount of representation from the labor and management groups. Trustees must also ensure that benefits are funded in accordance with collective bargaining agreements.
While these plans offer employees greater security and portability, they also have several risks. For instance, if an employer's financial condition becomes weak, the plan may be forced to make significant benefit reductions. This could significantly affect retirees' lives. Similarly, if an employer declares bankruptcy, it can leave the plan in a partial or full withdrawal.
If an employer exits a multiemployer plan, the Pension Benefit Guaranty Corporation (PBGC) can provide financial support. However, PBGC benefits are typically smaller than the underlying plan benefits. In addition, the PBGC insurance programs established financial requirements for withdrawals. These requirements may increase the risk for other creditors.
The remaining multiemployer plans are struggling to maintain their base of contributing employers. However, the plan assets are projected to be sufficient to provide benefits to all participants. There are also hybrid retirement designs, which attempt to incorporate some of the benefits of defined benefit and defined contribution plans. This may help maintain plan funding.
There are also some multiemployer plans that offer enhanced benefits. However, many of these plans also have mandatory auto-enrollment features that may discourage companies from offering these benefits to their employees.