Retirement Planning Vocab from Web
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Created by:
Steve_Heizmann on May 5, 2008
Subjects:
retirementplanning personalfinance
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25 terms
Terms | Definitions |
|---|---|
 401(k) Plan | A defined contribution plan permitting you to deduct a portion of your salary from your paycheck to contribute to an account before taxation. Your employer may make contributions to your account (company match). Taxes on contributions and investment earnings are deferred until you take money out of the plan in a distribution. |
| 403(b) Plan | Also called tax sheltered annuity (TSA), it provides a tax shelter for 501(c)(3) tax exempt employers, including public schools. Employers qualifying for the plan may defer taxes on contributions to certain annuity contracts or custodial accounts. |
| Adjusted Gross Income (AGI) | Your gross income (all the money you received) minus certain allowable adjustments, which may include alimony, moving expenses, and deductible retirement plan contributions. |
| Coverdell Education Savings Account | Previously called Education IRA, this new type of account was established for paying qualified education expenses of the designated beneficiary. Contributions are non-deductible. Earnings are tax-free for qualified withdrawals. |
| Death Distribution | Paying of IRA funds to a beneficiary after the death of an IRA owner. |
| Defined Benefit Plan | Here the sponsoring company provides a certain guaranteed benefit to participants based on a set formula. |
| Defined Contribution Plan | An employer-sponsored plan. Contributions are made to individual participant accounts by the company, employee, or both. The final benefit consists of assets (including investment returns) accumulated in the accounts. |
| Direct Rollover | Movement of funds from a qualified retirement plan into an IRA without the account owner taking receipt of funds. |
| Employer and Employee Association Trust Account, or Group IRA | IRA set up by employers, unions, or other employee associations for employees or members. |
| Fiduciary | An entity with the authority to make decisions about a plan's assets and administrative matters. Under ERISA, fiduciaries are required to make decisions based solely on the best interests of the plan participants. |
| Individual Retirement Account (IRA) | A tax-deferred retirement plan set up with a financial institution in which contributions can be invested in several types of securities, including stocks and bonds. |
| Individual Retirement Annuity | An IRA set up with a life insurance company by buying a special annuity contract. |
| Inherited IRA | An IRA inherited by a non-spousal beneficiary. |
| IRA Rollover | Movement of IRA funds from one IRA provider or qualified plan to the account owner, and then to a different IRA provider. The account owner has 60 days to complete the transaction before it is considered a taxable distribution of funds. |
| IRA Transfer | Movement of IRA funds directly from one IRA provider to another. Also known as Trustee to Trustee transfer. |
| Lump Sum Distribution | Payment to a participant of all funds accumulated in a tax-qualified retirement plan within one taxable year. |
| Money Market Fund | A mutual fund that generates income for participants through investments in short-term securities. |
| Participant Directed Account | A plan allowing you to select your own investment options. |
| Profit Sharing Plan | A company-sponsored plan funded only by company contributions. |
| Qualified Retirement Plan | A defined benefit or defined contribution retirement plan receiving special tax treatment. |
| Roth IRA | Sometimes referred to as the "back-ended" IRA, since contributions are not tax-deductible but earnings may be withdrawn tax-free. |
| Self-directed IRA | An IRA allowing you to select the investment options that best fit your investment objectives. |
| Spousal IRA | A regular or Roth IRA funded by a taxpayer in the name of his/her spouse who has less than the maximum allowable annual IRA contribution in annual compensation. |
| Stock Bonus Plan | A defined contribution plan. Company contributions are distributable only in the form of company stock. |
| Traditional IRA | Original IRA with three benefits: tax deferral of interest or earnings; potential tax deferral of contributions; and assurance for a more financially secure retirement |
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