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> that's why 401ks are great the total cost of an employee is understood completely This isn't true. There is no definitive way to determine the total amount o
by treeface 16y ago
> that's why 401ks are great the total cost of an employee is understood completely
This isn't true. There is no definitive way to determine the total amount of the future burden of a matching 401(k) plan because:
1) You don't know how long the employee will continue working there.
2) You don't know the interest rate at which to discount this future liability.
3) You don't know what future voters are going to change in the current matching system.
In fairness, determining the funded status of the future liability of a retirement pension is a lot more difficult than determining the expected cash flows for 401(k) plans.
- dantheman 16y agoI don't understand your position at all. The company puts money into a 401k, either as a grant or via some sort of matching scheme. The employee sets up their deductions, normally happens once a year. From that point you know exactly how much that employee will be paid in all compensation that year. There is no future liability. The money has been paid to the employee in it is in their hands now, and their retirement becomes their responsibility. I think you might be thinking of some other type of retirement plan.