A finished FIN-355 Topic 2 employer plan design memo example, weighing enrollment, match, vesting and default fund choices by the saving behavior each invites and what each costs. Searches like "fin 355 topic 2 assignment example", "fin355 topic 2 sample" and "fin-355 topic 2 example" land here.
What a finished FIN-355 Topic 2 employer plan design memo looks like
The finished memo, addressed to the composite employer's benefits committee, works four decisions with illustrative figures. Enrollment comes first: the current plan asks employees to sign up, and the memo recommends automatic enrollment at a default rate staff can change or decline, since research on automatic enrollment finds most new hires stay where the plan puts them. The match follows. Matching 100 percent of the first 3 percent of pay and 50 percent of the first 6 percent both cost 1,500 a year for an employee on 50,000 taking the full match, but the second formula asks for 3,000 of employee saving to earn it rather than 1,500. The memo recommends the second, reading the formula as a saving signal. Vesting and the default fund close it, each tied to duties ERISA places on whoever chooses them.
How a FIN-355 Topic 2 example is structured
The memo runs as four decisions, each handled in the same order: the current design, the options, what each option signals to employees, its cost and the recommendation. The problem is set out first in the committee's own terms, low participation among younger and lower-paid staff, and the goal of the redesign. The enrollment section compares opt-in with automatic enrollment and treats the default rate as a choice in its own right. The match section tables both formulas at contribution rates of 3, 4 and 6 percent, showing employer cost and total saving at each rate. The vesting section contrasts a three-year cliff with a graded schedule and follows each through an employee who leaves early. A default fund section explains why target date funds are the common choice. The memo ends by listing the ERISA duties the committee accepts and the records it has to keep.
Automatic enrollment as the starting position
New hires enter the plan at a stated rate unless they decline, because the memo treats the starting position as the choice most employees end up keeping.
Two formulas, one cost, two signals
Both matches cost 1,500 for someone saving 6 percent of 50,000, yet only the second rewards saving past 3 percent, so the memo prefers it.
Match cost at partial participation
At a 3 percent contribution the second formula costs 750 rather than 1,500, so the redesign spends less on low savers and still pays the full match at 6 percent.
Vesting read from the leaver's side
A three-year cliff forfeits the whole match for anyone leaving in year two, while a graded schedule releases part of it, and the memo prices both against typical tenure.
Fiduciary duties described, not litigated
Prudent selection, reasonable fees and decisions made for participants are listed as what ERISA asks of the committee, in plain terms and without legal interpretation.
Where marks go in FIN-355 Topic 2
Memos that describe plan features without saying what behavior each invites are marked down hardest, because design here is a message to employees. Recommending the richer-sounding match without tabling its cost at several contribution rates leaves the committee unable to see that two formulas can cost the same and teach different habits. A default rate set without comment misses that, for most new hires, the default is the decision. Vesting discussed only from the employer's side ignores what forfeiture does to recruitment and to staff who leave early. Papers that present ERISA as a list of penalties, or quote current contribution limits as permanent figures, misjudge the register, because the course wants duties described and limits cited as set by statute and adjusted. A memo that never says who holds the fiduciary role leaves its weightiest choice unassigned.
Get a FIN-355 Topic 2 example written to your instructions
Send the FIN-355 Topic 2 instructions and your classroom rubric, with the employer case or plan summary your section uses. We write a custom example to them, with each design choice read as a signal to employees, both match formulas costed at several contribution rates, vesting priced for leavers and fiduciary duties described, in 24 to 48 hours. The first one is free.
FIN-355 Topic 2 questions, answered
Why does the match formula matter if the cost is the same?
Because employees read the formula as advice. When the full match arrives at 3 percent of pay, many contribute exactly 3 percent and stop; when it takes 6 percent to earn, contributions tend to gather at 6. The employer spends the same on a full participant either way while its staff save very different amounts, and the memo therefore treats the formula as a design signal and not only as a cost line.
What does ERISA require of an employer that sponsors a plan?
At a descriptive level, that the people managing the plan act prudently and solely in participants' interest, follow the plan documents, diversify investments, keep fees reasonable and provide the disclosures participants are owed. The memo describes those duties so the committee knows what it is accepting. It does not interpret them for a real plan, which is work for benefits counsel, and the example is coursework only.
Why use a target date fund as the default investment?
Because employees who never make a choice still end up in a diversified mix that shifts toward bonds as their retirement year approaches. Department of Labor rules give fiduciaries some protection when a default meets the requirements for a qualified default investment, and target date funds commonly do. The memo still asks the committee to compare fees and glide paths across providers, since these funds differ considerably.