The financial statements of XYZ Corporation Essay

The financial statements of XYZ Corporation - Essay ExampleThe employer receives a tax minus equaling his role in the employees defined contribution plan. The employees benefit from deduction of contribution from pre-tax salary, which enables them to save taxes and fund the retirement plan with the gross amount. The tax continues to be deferred until the plan is distributed and therefore there remain opportunities for fast investment growth. The advantages for defined contribution plan are that this plan allows the employees to save the tax defrayals until the plan is withdrawn, employees too benefit from employer contribution into the fund, the employees will have the opportunity after the retirement to either receive the entire amount or a series of payment over their entire life etc. The major advantage for employer underlying this plan is that it enables him to evade the risk of investment and also the burden of plan contribution is shared between the employer and the employe es. Its major disadvantage is the complexity and strictness of the rules concerning the plan administration (Employer-Sponsored Retirement Plans, 2005). Being the one who establishes the pension plan, an employer is expected to administer it and work its requirements. The employer will monitor and supervise the investment poured into the plan and review the growth of funds. Moreover, he is also required to provide periodical information to the employees concerning the operation and positioning of the invested funds (Retirement Plan Basics, n.d. retrieved 08.09.06)