Life insurance is an employee benefit that many people want. It provides the employee’s loved ones with money in case of the employee’s death, to cover final expenses, medical bills, or to pay for their living expenses. It is an especially important benefit for those employees that have families with young children.
The two main types of life insurance are survivor income plans and group life insurance plans. The survivor income plan pays the beneficiaries of the insurance regular monthly payments to help cover their living expenses after the employee dies. The second life insurance type, the group life insurance plan pays out the benefit in a lump sum to the beneficiary. This amount is based on how much coverage the employee selected during their coverage, and it is usually purchased in $10,000-$25,000 increments.
Retirement Plans
With the uncertainty of whether or not Social Security will still be available in the future, planning for retirement is especially important for employees. Employers need to address this concern by offering their employees a way to protect themselves and provide for their retirement years. To do this there are several options that an employer can offer.
First a ROTH or regular IRA savings program can be offered to employees. Contributions to these programs are voluntary, employers can contribute to employee programs, and employees can determine how much they want to contribute to their IRA program each month. The benefit of a ROTH IRA is that a person can withdraw money from their account to buy a house without penalties. However, contributions to this type of IRA are not tax free, but when the employee starts making withdrawals during their retirement they don’t have to pay taxes on the money. This plan is appropriate for employees that will be in a higher tax bracket when they retire. Regular IRA contributions are tax free, however, money withdrawn at retirement is taxable.
Participants can contribute up to $2000 per year, as long as it does not exceed what they actually earned.
Participants can only make contributions to their account until they are 70 years old.
Deposits have to be made prior to filing personal income tax returns. (April 15).
The benefit of pre-tax dollar contributions may be limited or even eliminated if the contributor makes more than $25,000 for a single person or $40,000 for a married couple.