Question

. Pensions 
Address the following elements in the form of a memo to your CEO:

From Target Corporation's financial information, what type of pension plan does it have? Discuss the reasons why Target Corporation has chosen this particular plan.

What was the effect of the pension plan on Target Corporation's financial statements? Defend your response.

Your CEO has informed you—the controller of Target Corporation—that the board of directors has made the decision to look at other options of types of retirement plans. Investigate what other alternatives would be available, and determine which would be appropriate for Target Corporation.

Income statements

Answer 1

Target Corporation (Target, the Corporation or the Company) was incorporated in Minnesota in 1902. We offer our customers, referred to as "guests," everyday essentials and fashionable, differentiated merchandise at discounted prices. Our ability to deliver a preferred shopping experience to our guests is supported by our supply chain and technology, our devotion to innovation, our loyalty offerings such as REDcard Rewards and Cartwheel, and our disciplined approach to managing our business and investing in future growth. We operate as a single segment designed to enable guests to purchase products seamlessly in stores or through our digital channels. Since 1946, we have given 5 percent of our profit to communities.

Pension Plan. "Pension Plan" means the tax qualified defined benefit pension plan, established for the benefit of employees eligible to participate therein, and known as the Target Corporation Pension Plan, including any predecessor plan(s) or successor plan.

TARGET CORPORATION PENSION PLAN is a Defined Benefit Planproviding retirees with a predetermined monthly retirement benefit upon reaching a specific age. The retirement benefit paid to a retiree is typically calculated using a formula which often employs years of credited service under the plan and salary information. The retirement benefit is typically payable to the employee upon attainment of their normal retirement age for the remainder of his/her lifetime. Benefits under this type of plan are often referred to as accrued benefits. This type of plan does not maintain individual accounts for employees.

It is important to remember that under this type of plan, the Alternate Payee is typically not awarded a lump sum cash payment from the Plan. It is usually a requirement of the Plan that the amount awarded to the Alternate Payee be expressed in terms of a monthly benefit payable for either the lifetime of the Participant or the Alternate Payee.

3 Reasons To Choose A Target Market First

1. Having the right target market helps you determine where to find potential clients who are looking for what you have to offer. If you have a target market, you know where to concentrate your marketing efforts and what to offer that is compelling and well received. You know what associations to speak to, magazines and journals to write for, and influential people with whom to networkyou know where your potential clients gather. Voila! You now know where to show up.
2. Virtually every target market already has some kind of network of communication established. For your marketing to work, your clients need to spread your messages for you. If they already have a network of communication set up, they can talk to each other about you and your marketing messages can travel that much faster. What are networks of communication?
3. Environments that are set up to help a group communicate associations, social networking sites, clubs, various publications, events, and more.

And, finally, choosing a target market lets the people in that target market know that youve dedicated your lifes work to them. You will get to know everything about their wants, needs and compelling desires. And by showing up for them on a consistent basis, they will get to know you and love you because you will demonstrate that you understand them, which will be true. You will understand them like no one else will.

effect of the pension plan on Target Corporation's financial statements

There are various sorts of pension plans, but here we review only a certain type: the defined benefit pension plan. With a defined benefit plan, an employee knows the terms of the benefit that he or she will receive upon retirement. The company is responsible for investing in a fund in order to meet its obligations to the employee, so the company bears the investment risk. On the other hand, in a defined contribution plan, a 401(k), for example, the company probably makes contributions or matching contributions, but does not promise the future benefit to the employee. As such, the employee bears the investment risk.

Among defined benefit plans, the most popular type bears a promise to pay retirees based on two factors: 1) the length of their service and 2) their salary history at the time of retirement. This is called a career average or final pay pension plan. Such a plan might pay retirees, say, 1.5% of their "final pay," their average pay during the last five years of employment, for each year of service for a maximum number of years. Under this plan, an employee with 20 years of service would receive a retirement benefit equal to 30% (20 years x 1.5%) of their final average pay. But formulas and provisions vary widely; for example, some will reduce or offset the benefit by the amount of social security the retiree receives.

Funded Status = Plan Assets - Projected Benefit Obligation (PBO)
A pension plan has two primary elements:

• The future liabilities, or benefit obligations, created by employee service.
• The pension fund, or plan assets,that are used to pay for retiree benefits.

At this primary level, a pension plan is simple. The company, called the plan sponsor in this context, contributes to its pension fund, which is invested into bonds, equities and other asset classes in order to meet its long-term obligations. Retirees are then eventually paid their benefits from the fund.

Three things make pension fund accounting complicated. First, the benefit obligation is a series of payments that must be made to retirees far into the future. Actuaries do their best to make estimates about the retiree population, salary increases and other factors in order to discount the future stream of estimated payments into a single present value. This first complication is unavoidable.

Second, the application of accrual accounting means that actual cash flows are not counted each year. Rather, the computation of the annual pension expense is based on rules that attempt to capture changing assumptions about the future.

Third, the rules require companies to smooth the year-to-year fluctuations in investment returns and actuarial assumptions so that pension fund accounts are not dramatically over- (or under-) stated when their investments produce a single year of above- (or below-) average performance. Although well-intentioned, smoothing makes it even harder for us to see the true economic position of a pension fund at any given point in time.

Types of ReTiRemenT plans

The first step to understanding your retirement benefits is to find out what kind of retirement plan your employer has. There are two major types of plans, defined benefit and defined contribution, which are described here and outlined in Table 1 on page 4. Keep in mind that your employer may have more than one type of plan, and may have different participation requirements for each. A defined benefit plan, funded by the employer, promises you a specific monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement. Or, more often, it may calculate your benefit through a formula that includes factors such as your salary, your age, and the number of years you worked at the company. For example, your pension benefit might be equal to 1 percent of your average salary for the last 5 years of employment times your total years of service. A defined contribution plan, on the other hand, does not promise you a specific benefit amount at retirement. Instead, you and/or your employer contribute money to your individual account in the plan. In many cases, you are responsible for choosing how these contributions are invested, and deciding how much to contribute from your paycheck through pretax deductions. Your employer may add to your account, in some cases by matching a certain percentage of your contributions. The value of your account depends on how much is contributed and how well the investments perform. At retirement, you receive the balance in your account, reflecting the contributions, investment gains or losses, and any fees charged against your account. The 401(k) plan is a popular type of defined contribution plan. There are four types of 401(k) plans: traditional 401(k), safe harbor 401(k), SIMPLE 401(k), and automatic enrollment 401(k) plans. The SIMPLE IRA plan, SEP, employee stock ownership plan (ESOP), and profit sharing plan are other examples of defined contribution plans.

alternatives would be available

Sometimes, retirement plan administrators, managers, and others involved with the plan make mistakes. Some examples include:

Your 401(k) or individual account statement is consistently late or comes at irregular intervals;

Your account balance does not appear to be accurate;

Your employer fails to transmit your contribution to the plan on a timely basis;

Your plan administrator does not give or send you a copy of the Summary Plan Description; or

Your benefit is calculated incorrectly. It is important for you to know that you can follow up on any possible mistakes without fear of retribution. Employers are prohibited by law from firing or disciplining employees to avoid paying a benefit, as a reprisal for exercising any of the rights provided under a plan or Federal retirement law (ERISA), or for giving information or testimony in any inquiry or proceeding related to ERISA.

Start with your employer and/or plan administrator

If you find an error or have a question, in most cases, you can start by looking for information in your Summary Plan Description. In addition, you can contact your employer and/or the plan administrator and ask them to explain what has happened and/or make a correction.

Is it possible to sue under ERISA?

Yes, you have a right to sue your plan and its fiduciaries to enforce or clarify your rights under ERISA and your plan in the following situations: To appeal a denied claim for benefits after exhausting your plan’s claims review process; To recover benefits due you; To clarify your right to future benefits; To obtain plan documents that you previously requested in writing but did not receive; To address a breach of a plan fiduciary’s duties; or To stop the plan from continuing any act or practice that violates the terms of the plan or ERISA.