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A Job at S&S Air Chapter Case

  • Date Submitted: 07/29/2016 07:21 PM
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A job at S&S Air Chapter Case
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You recently graduated from college, and your job search led you to S&S Air.   Because you felt the company's business was taking off, you accepted a job offer.   The first day on the job, while you were finishing your employment paperwork, Chris Guthrie, who works in finance, stops by to inform you about the company's 401(k) plan.  
A 401(k) plan is a retirement plan offered by many companies.   Such plans are tax-deferred savings vehicles, meaning that any deposits you make into the plan are dedicated from your current pre-tax income, so no current taxes are paid on the money.   For example, assume your salary will be $30,000 per year.   If you combine $1,500 to the 401(k) plan, you will pay taxes on only $28,500 in income. No taxes will be due on any capital gains or plan income while you are invested in the plan, but you will pay taxes when you withdraw the money at retirement. You can contribute up to 15 percent of your salary plan. As is common , S&S also has a 5 percent match program. This means that the company will match your contributions dollar-for-dollar up to five percent of your salary, but you must contribute to get the match.
The 401(k) plan has several options for investments, most of which are mutual funds.   A mutual fund is a portfolio of assets.   When you purchase shares in a mutual fund, you are actually purchasing partial ownership of the fund's assets.     The return of the fund is the weighted average of the return of assets owned by the fund, minus any expenses.   The largest expense is typically the management fee, paid to the fund manager.   The management fee is compensation for the manager, who makes all of the investment decisions for the fund. S&S Air uses Arias Financial Service as its 401 (k) plans administrator.
Chris Guthrie then explains that the retirement investment options offered for employees are as follows:
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