Group Retirement Plans

Retirement plan basics include the

• • Plan sponsor
• • Plan administrator
• • Plan participants
• • Plan document
• • Summary plan description

Qualified retirement plans offer

• • Tax incentives
  • o Employers and participants can reduce their taxable income.
  • o Employer contributions to a traditional qualified plan on behalf of a participant are taxable at withdrawal.
  • o Tax-deferred investment earnings.

Employee Retirement Income Security Act (ERISA) requirements for qualified retirement plans include

• • Vesting schedules
  • o Graded vesting (or step vesting)
  • o Cliff vesting

Types of benefit formulas include

• • Defined benefit (DB) plan: The benefit is determined in advance.
• • Defined contribution (DC) plan: The contribution is determined in advance.

Pension plan

• Defined benefit formula

401(k) plan: A retirement plan that allows employees to make pre-tax contributions to the plan through salary reduction.

• • Pre-tax contributions
• • Matching contributions
• • Withdrawals
• • Loans

Roth 401(k) plans: After-tax contributions and tax-free distributions of contributions and earnings.

Two types of plans similar to the 401(k):

• • 403(b) plan
• • 457 plan

Profit Sharing Plans

Stock Bonus Plans

Qualified retirement plans for small employers include

• • SEP
• • SIMPLE IRA
• • SIMPLE 401(k)
• • Keogh Plan

Supplemental Benefits

Life insurance policyowners can purchase several different types of supplemental benefits to add to their policies.

Supplemental disability benefits include:

• • waiver of premium for disability (WP)— the insurer waives renewal premiums while the insured is totally disabled
• • waiver of premium for payor—the insurer waives renewal premiums if the policyowner dies or becomes totally disabled
• • disability income benefit—provides a monthly income benefit to the policyowner- insured if he becomes totally disabled

Accident-related benefits include:

• • accidental death benefit—provides an additional death benefit if an accident causes the insured’s death
• • accidental death and dismemberment (AD&D) benefit—provides an additional benefit if an accident causes the insured to die or to lose any two limbs or the sight in both eyes

Accelerated death benefits include:

• • terminal illness (TI) benefit—pays part of the death benefit to a policyowner-insured with a terminal illness
• • dread disease (DD) benefit—pays part of the death benefit to the policyowner if the insured suffers from a specified disease
• • long-term care (LTC) insurance benefit—pays a monthly benefit to the policyowner if the insured requires constant care for a medical condition

Coverage for additional insureds includes:

• • spouse and children’s insurance rider
• • children’s insurance rider
• • second insured rider

• • guaranteed insurability (GI) benefit—the policyowner can purchase additional insurance on stated dates
• • paid-up additions option benefit—(for whole life only) the policyowner can purchase single-premium paid-up additions on stated dates