Managing Human Resources-Phase 2 DB2 Essay Example | Topics and Well Written Essays - 500 words

Managing Human Resources-Phase 2 DB2 - Essay Example ncluding NL&C, offer matching contributions up to a certain percentage of an employee’s pay, capped at a certain amount of contribution per employee per month. (AllFinancialMatters, 2006) 2. The 401k contribution is a â€Å"defined contribution plan,† which means that the amount put in is set by the employee, and the amount received upon retirement depends upon the performance of his/her investments during the intervening period. 3. The 401k is exempt from current income taxes, state and federal. This means that the amount contributed can be deducted from the employees’ current net income when calculating for tax purposes (Block, 2007). The primary reasons why companies want to implement 401k plans are twofold: (1) to encourage employees to provide for their retirement, particularly given the likelihood that social security payments will not cover their overall costs when they retire, and (2) to help make the employee more loyal, and more likely to stay and perform for, the company which grants and administers the 401k. Unfortunately, most companies do a poor job of explaining the 401k, and as a result have low participation rates. My plan is to appeal particularly to the younger employees (which are most of those joining NL&C), who can benefit most from a long-term savings plan. Since young people think less about their retirement, I want to point out the other advantages: c. By deducting their 401k plans from their weekly wages, they are less likely to spend the money, because it never enters their bank account. This â€Å"forced† savings effect is less painful than trying to put aside money. b. I will also make an assumption that they borrow against their 401k to buy a house, and assume a 5% increase in house value per year, leveraged at 80%, which will double their equity in less than 10 years. c. Finally, I will demonstrate that everyone in the room can be a millionaire on a ‘middle class’ salary, and give them the opportunity to dream about