Basic Employment Benefits and Related Financial

Transcript:Basic Employment Benefits and Related Financial:
Basic Employment Benefits and Related Financial Interests Jody Keegan, Program Analyst Joyce Merilos, Program Analyst Fall 2020 What are some of the basic employment benefits and related financial interests How are they structured? How are they reported? How are they analyzed for conflicts? Agenda: 2 A type of retirement plan that an employer establishes for its employees. The employee selects the various investments (mutual funds or other investments). Often the employer will make contributions to the employee’s plan as well. Individual accounts are set up for participants and deductions are taken from an employees salary or wages on a pre-tax basis. Benefits are dependent upon the performance of the underlying investments in the plan, and are paid in the future. Defined Contribution Plan: How is it structured? 3 Defined Contribution Plan How is it Reported? 4 Defined Contribution Plan: How is it analyzed for conflicts? 18 U.S.C. § 208: A Federal employee has a financial interest in the particular matter affecting the assets held in the plan Analyze each asset using the guidance appropriate for that type of asset What Exemptions may apply? 5 C.F.R. § 2640.201(a) for diversified mutual funds, 5 C.F.R. § 2640.201(b) for sector mutual funds, 5 C.F.R. § 2640.201(c) for employee benefit plans, or 5 C.F.R. § 2640.202 the de minimis for publicly traded securities. 5 A type of retirement plan that an employer establishes for its employees. Is calculated using a formula specific to the plan, utilizing factors such as an employee’s earnings history and tenure. Upon retirement an employee will receive a fixed annuity. The annuity typically makes biweekly or monthly payments to the employee for life. The annuity may also pay a survivor benefit to the employee’s spouse after the employee’s death. Under some plans (such as a cash balance pension plan), the employee can elect to cash out his or her interest in the plan and receive a lump-sum payment of the balance. Defined Benefit Plan: How is it structured? 6 Defined Benefit Plan How is it Reported? 7 Defined Benefit Plan: Conflicts Considerations Employer guarantees the targeted benefit level Employee does not have a financial interest in particular matters affecting the plan’s underlying assets. Rather, the employee has a financial interest in particular matters affecting the plan sponsor’s ability or willingness to meet its pension commitments. An employee will have a “covered relationship” with the plan’s sponsor. In most cases an