Ch $14$: Assignment $-$ Planning for Retirement

$11.$ Evaluating employer plans

What retirement plan options are available?

It is always your responsibility to learn about the basic and supplemental $($voluntary$)$ plans an employer may offer. There are noncontributory and contributory pension plans, which stipulate vesting requirements. Within these types, there is either a defined contribution plan or a defined benefit plan. Many employers also offer supplemental or voluntary programs such as profit$-$sharing, thrift and savings, and $401($k$)$ plans.

Consider a dialogue between Yakov and Ana, both new employees at a big Fortune $500$ company. Both had taken a personal finance class in college several years ago. Today, they are reviewing their notes from the recent new$-$employee benefits meeting and helping each other complete the notes they've taken.

YAKOV: I heard the HR manager say that the company uses the graded schedule. I$\text{'}$m not sure what that means.

ANA: I remember this from personal finance class. Graded schedule assumes that vesting is $$ over $q,$ years.

YAKOV: What's the other option?

ANA: The cliff vesting schedule. Cliff vesting requires $$ vesting over $q,$ years.