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Key Concepts Of Compensation And Benefit 401k Plan
401k plan is an employee retirement scheme sponsored by employers and is also known as the defined contribution retirement scheme provided under section 401k of the Internal Revenue Code. This paper looks at the advantages of the 401k plan to employees, effective presentation and orientation to new employees, and the key concepts of compensation and benefits.
Advantages of 401k Plan
Firstly the employees are granted pre-tax advantages in that the money that is invested into the plan is tax-free, and the dividends, interests, and capital gains earned from investing the contribution are not taxed either unless the holder is withdrawing. The contribution is made from the pre-taxed income, and hence the taxable capacity of the employees is reduced, thus minimizing payable tax.
Secondly, the plan enables employees to avoid the high administrative costs in managing their savings since the company would do collective investment plans for all its employees. The employer also identifies viable investment portfolios on behalf of the employees [Employee Benefits in State and Local Governments].
This plan also gives employees the flexibility to choose the kind of investment to make. Adventurers may opt for high-risk investments, for example, investing in equities, while others may prefer low-risk investments like investing in short-term bonds. This plan is also very flexible enough to allow employees to join other organizations and still remain members of the plan of their previous employer but upon payment of a little maintenance fee.
The employees also benefit since the money saved is subjected to compound interests over long periods of time and therefore creates wealth for the employees and is not affected by the time value of money (inflation).
The plan also grants employees an opportunity to make long-term savings for their retirement since money is being directly deducted from their pay checks hence they do not need to contribute to other separate plans which may be insecure.
Finally, employers also allow employees to borrow money from their 401k plans in times of emergencies with very low application fees and repay at the prevailing market rates, but this is an added advantage to employees since they are repaying to themselves i.e. their own 410k account [Retirement Benefit Estimates for State and Local Government Workers].
Effective Presentation during Orientation
This is introducing new employees to the firm and its also known as settling connections or induction. Its a training process that aims at familiarizing the new employee to the firm and gets to know the administrative machinery, communication channels, responsibilities, rules, relationships, physical facilities, organizational history, and job allocation.
During the orientation week, I will focus on actual anxieties and reservations of the new employees to make them more comfortable, confident, and to reduce induction crises and be able to feel a sense of belonging and acceptance by allowing them to interact with peers, customers, supervisors etc. I would also avoid overloading the employees with a lot of information by spreading my presentation over the provided time span and through creating correct impressions about the plan.
To avoid confusion on 401k plans, I would do a general presentation to the employees to introduce them to the plans and give them specific information about the nature of the plans. Then I would ask them to use the website to find more information whenever they are free. Brochures which detail the plan would be very useful, and I would make them available. I would also organize visits to the key department that deals with retirement benefits like the finance section.
Key Concepts of Reward and Compensation
Reward management is the process of developing and implementing strategies, policies, and procedures that help organizations to reward employees efforts effectively. Reward can be financial or non-financial. It can also be termed as remuneration payment.
The first concept of reward is the equitable pay that deals with how well one is paid relative to the other person and the effort he /she puts into the job. Therefore firms should pay the employees equitably.
The second policy is on fairness in payment, for example, the pay differences and how they are determined like the use of pay structures and job evaluation systems.
Mode of payment that best suits the employee should also be considered. Casual employees may prefer cash payment while executives may be paid through their bank accounts [Employee Benefits in Private Industry].
Administration of the non financial rewards like praising, recognition of effort, self esteem, personal growth and job satisfaction should also be proper.
Reward concepts regarding seniority and merit should also be considered, and policies that permit employees to earn more money in the form of bonuses, commissions, and gains should be well stated for new employees to understand.
Finally, organizations should observe the minimum wages law, how to increase pay across the board, and the movement of employees between pay structures.
Conclusion
The 401k retirement plan is very useful for the employees who want to invest for their retirement period, and the appropriate orientation strategies would help new employees settle faster while the concepts of reward help employees obtain their equitable share of the efforts they put into the firm.
Work Cited
Employee Benefits in State and Local Governments, 2007 Summary (PDF) Providing data from the 2000 survey on incidence and provisions in state and local government establishments.
Employee Benefits in Private Industry, 2007 Summary (PDF) providing summary from the 2007 survey on incidence and provisions in private establishments.
Employee Benefits in Private Industry, 2006 Summary (PDF)- providing information from the 2006 survey on incidence and provisions in private establishments.
Retirement Benefit Estimates for State and Local Government Workers, 2007 Summary (PDF) providing data from the 2007 survey on retirement provisions in state and local government establishments. Web.
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