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401(k) plan:
A retirement savings plan sponsored by an employer that allows employees to contribute a portion of their wages to individual accounts. Elective salary deferrals are excluded from the employee’s taxable income (except for designation Roth deferrals)

403(b) plan:
A US tax-advantaged retirement savings plan available for public education organizations, some non-profit employers (only IRS 501(c)(3) organizations), cooperative hospital services organizations, and self-employed ministers in the United States.

457 plan:
A non-qualified, tax-advantaged deferred compensation retirement plan that is available for governmental and certain non-governmental employers in the US. The employer provides the plan and the employee defers compensation into it on a pre-tax basis.

Cash Balance plan:
A pension plan under which an employer credits a participant’s account with a set percentage of his or her yearly compensation plus interest charges. A cash balance plan is a defined-benefit plan; therefore, changes in the portfolio do not affect the final benefits to be received by the participant upon retirement or termination. The company solely bears all ownership of profits and losses in the portfolio.

Collective Investment Trust (CIT):
A fund that is operated by a trust company or bank and handles a pooled group of trust accounts. Collective investment funds combine the assets of various individuals and organizations to create a larger, well-diversified portfolio while also taking advantage of economies of scale to lower costs.

Defined benefit:
Defined benefit plan, or traditional pension plan, provides a fixed, pre-established monthly benefit for employees at retirement. The value of the benefit is based on number of years working and compensation. Employers bear the risk and distributions are guaranteed.

Defined contribution:
A retirement plan where the employee and sometimes the employer contributes a certain amount or percentage of employee salary into an individual account. Contributions are tax-deductible and grow tax-deferred until distributions. Employee bears the risk and distributions are not guaranteed.

Money taken out of your qualified retirement plan (401(k) or IRA) after 59 ½ and is subject to income tax. If taken before 59 ½, then a 10% penalty is imposed. Distributions from Roth IRA are tax-free when certain conditions are met.

The Employee Retirement Income Security Act is a federal law that sets standards of protection for individuals in qualified retirement plans. Certain rules and regulations must be met for plans to be in compliance with ERISA including providing particiapnts with plan information in regards to features and funding, setting a minimum participation, vesting, benefit accrual and funding, provide fiduciary responsibilities, and much more.


Individual Retirement Account (IRA):
An individual investment account set up with a bank or mutual fund company that allows you to contribute tax deductible money, up to a certain annual amount, that grows tax-deferred until distributions are made.


Non-Qualified plans:
Any type of tax-deferred, employer-sponsored retirement plan that falls outside of Employee Retirement Income Security Act (ERISA) guidelines. Non-qualified plans are designed to meet specialized retirement needs for key executives and other select employees.

Qualified plans:
A type of retirement plan established by an employer for the benefit of the company’s employees. There are two types: defined benefit and defined contribution.

When you transfer the holdings of one retirement plan to another without suffering tax consequences

Roth 401(k):
An employer-sponsored investment savings account that is funded with after-tax money. After the investor reaches age 59 ½ and has held the account for at least 5 years, the withdrawals of any money from the account (including investment gains) are tax-free.

Roth IRA:
An individual retirement plan that bears many similarities to the traditional IRA, but the contributions are not tax-deductible and qualified distributions are tax-free.

Separate Account:
A privately managed investment account opened through a brokerage or financial advisor that uses pooled money to buy individual assets.

Stable Value:
An investment option found in company retirement accounts and are comprised of wrapped bonds—bonds that are paired with insurance contracts to guarantee a specific minimum return.

Target Date Funds (TDF):
They are well-diversified* investments that adjust the allocation according to how near or far the target retirement date happens to be. The further from the retirement date, the higher the equity mix. The closer the retirement date is, the more the allocation shifts to conservative investments. The change in allocation over time is commonly referred to as the glide path.

*Diversification does not ensure a profit or protect against loss in a declining market.

The process by which an employee accrues non-forfeitable rights over employer contributions made to the employee’s qualified retirement account or pension plan.