Chapter 15 Vocabulary PDF

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The vocabulary words they are important to help with the homework and studying....

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Week Thirteen: Chapter 15: Social Security &v Employer-Funding Pensions

FIN 1100 04/02/2019

1) Defined-Benefit Plan: A traditional pension plan in which you receive a promised or “defined” pension payout at retirement. The payout is based on a formula that takes into account your age at retirement, salary level, and years of service.

2) Noncontributory Retirement Plan: A retirement plan in which the employer provides all the funds and the employee need not contribute.

3) Contributory Retirement Plan: A retirement plan in which the employee, possibly with the help of the employer, provides the funds for the plan.

4) Funded Pension Plan: A pension plan in which the employer makes pension contributions directly to a trustee who holds and invests the employees’ retirement funds.

5) Unfunded Pension Plan: A pension fund in which the benefits are paid out of current earnings on a pay-as-you-go basis.

6) Cash-Balance Plan: A retirement plan in which workers are credited with a percentage of their pay, plus a predetermined rate of interest.

7) Employee Stock Ownership Plan (ESOP): A retirement plan in which the retirement funds are invested directly into the company’s stock.

8) 401(k) Plan: A tax-deferred retirement savings plan in which employees of private corporations may contribute a portion of their wages up to a maximum amount set by law ($18,000 in 2017 and rising in the future with inflation in $500 increments). Employers may contribute a full or partial matching amount and may limit the proportion of the annual salary contributed.

9) Keogh Plan: A tax-sheltered retirement plan for the self-employed. 10)

Simplified Employee Pension Plan (SEP-IRA): A tax-

sheltered retirement plan (you don’t pay taxes on any earnings while they remain in the plan) aimed at small businesses or at the self-employed.

11)

Individual Retirement Arrangement (IRA): A taxadvantaged retirement account. The contribution may or may not be tax deductible, depending on the individual’s income level and whether he or she, or his or her spouse, is covered by a company retirement plan.

Week Thirteen: Chapter 15: Social Security &v Employer-Funding Pensions

12)

FIN 1100 04/02/2019

Roth IRA: An IRA in which contributions are not tax deductible.

That is, you make your contribution to this IRA out of after-tax income. But once the money is in there, it grows tax free, and when it is withdrawn, the withdrawals are tax free.

13)

529 Plan: A tax-advantaged savings plan used only for college and graduate school.

14)

Single Life Annuity: An annuity in which you receive a set

monthly payment for the rest of your life.

15)

Annuity for Life or a “Certain Period”: A single life annuity

that allows you to receive your payments for a fixed period of time. Payments will be made to you for the remainder of your life, but if you die before the end of the time period (generally either 10 or 20 years), payments will continue to be made to your beneficiary until the end of the period. 16) Joint and Survivor Annuity :An annuity that provides payments over the life of both you and your spouse.

17)

Lump-Sum Option : A payout arrangement in which you receive all of your benefits in one single payment....