EFG Corporation is considering the installation of some form of retirement plan. The owner’s stated objectives for the plan, in the order of importance, are:
1. Rewarding long-term employees
2. Retaining employees
3. Providing a level of retirement income equal to 60% of the employee’s earnings
4. Funding that is tax-deductible
5. No risk to employees of losing the available benefits
The company has been in business for 20 years, and has stable cash flow.
The company furnishes you with an employee census and is willing to contribute the equivalent of 35% of payroll to the plan.
Based upon their stated objectives, what type of retirement plan would be most suitable for the corporation? Explain your reasoning for the plan you choose.