Products: Contribution Plans

Hanratty & Associates knows how valuable retirement and health contribution plans are to employees. As more baby boomers approach retirement and health care expenses continue to rise, the desire for adequate savings is increasing. Our consultants will help you understand what kind of defined benefit and contribution plans are the most appropriate to offer to your employees.

Defined Contribution Plans
A defined contribution plan details how much is contributed by each employee, and a possible contribution by the employer. With this plan contribution it is not necessary to specify how much the employee will receive at retirement for health expenses. Individual accounts must be set up for each participant in the plan and employees can contribute to a fixed maximum amount each year.

Common defined contribution retirement plans are 401(k) plans and profit sharing plans. Participants contribute to defined contribution plans and employers often match a percentage of these contributions. Participants then make investment decisions based on the portfolio you have chosen.

Hanratty & Associates can also help you design Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Voluntary Employee Benefits Associations (VEBAs), all of which are defined contribution plans.

Health Reimbursement Arrangements (HRAs) are employer-sponsored plans that are provided with employer dollars rather than employee salary reductions. This allows you to reduce health plan costs by combining the Health Reimbursement Arrangements (HRAs) with a high deductible health plan. Employees may rollover unused balances at the end of the year.

Health Savings Accounts (HSAs) consist of a tax-deductible, high deductible health plan and a tax-free claims expense reimbursement and tax-deferred savings plan used to help employees pay unreimbursed medical expenses. Though employers and/or employees may contribute to HSAs, the account belongs to the individual and are portable. Anyone who is covered by a high deductible health plan may establish and benefit from an HSA.

Voluntary Employee Benefits Associations (VEBAs) permit retirees and employees to accumulate assets on a tax-deferred basis to provide income for health expenses. Unique to VEBAs is that distributions may be used to provide health care and other types of welfare benefits including medical and dental insurance as well as other health related expenses.

Defined Benefit Plans
A defined benefit plan, also called a pension plan, specifies how much money each employee receives at retirement. Contributions are based on an actuarial determination of what each employee will need at retirement as well as their average compensation. A defined plan is designed to pay a fixed annual amount to eligible employees during their retirement years, providing guaranteed retirement income security.

Both defined contribution plans and defined benefit plans come with their own complex requirements and Internal Revenue Code regulations. Hanratty & Associates will help you understand the advantages and disadvantages of both types of plans, from how to fund a plan to what tax savings you might achieve.

Hanratty & Associates consultants Tim Hanratty and Robin Baumgartner are certified securities principals through SunAmerica Securities* and can assist you with any of your defined contribution and benefit plans.

Contact us to learn more about defined benefit and contribution plans.

*Hanratty & Associates, Inc. is not affiliated with SunAmerica or AIG.