Dictionary - Retirement
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

401(k) Plan

A 401(k) plan is a tax-deferred salary savings plan that companies can offer their employees as a retirement account. A 401(k) plan meets the tax-deferral requirements of Section 401(k) of the IRS tax code, hence its name. Read more

403(b) Retirement Plan

A 403(b), commonly referred to as a Tax-Deferred Annuity (TDA) or Tax-Sheltered Annuity (TSA) plan, is a retirement savings plan available to employees of certain public education organizations, non-profit employers and cooperative hospital service organizations, as well as to self-employed ministers.  Organizations offer 403(b) tax-deferred retirement plans to eligible employees to allow for long-term investment growth, similar to a 401(k) plan. Read more

AARP (American Association of Retired Persons)

AARP stands for the American Association of Retired Persons.It is a nonprofit organization that advocates and promotes the well-being of Americans 50 years of age or older. Read more


In the finance world, an advisor (also spelled adviser) is an educated investment professional who helps people and businesses set and meet long-term financial goals. An advisor is similar to an investment advisor, financial planner, investment manager or investment consultant. Read more

Blackout Period

A blackout period is a time period of roughly 60 days during which a company's employees are unable to make changes to their savings or retirement plans. Nearly every organization offers employees non-taxable retirement savings option. Read more


CalPERS is the abbreviation for the California Public Employees' Retirement System.It is the nation's largest pension fund. Read more

Dark Pool

A dark pool is trading activity that occurs directly between parties without the use of an exchange, thereby keeping the transactions private. Institutions usually create dark pools. Read more

Deferred Stock Purchase Plan

A deferred stock purchase plan is an uncapped stock contribution with an employer matching the contribution that vests as the employee provides additional service during a deferral period.  In a deferred stock purchase plan, employees purchase company restricted stock on a pre-tax basis using income that would otherwise be paid as taxable salary or a bonus.These stock purchases would be fully vested, but their delivery and taxation would be delayed until a pre-established date in the future. Read more

Defined Benefit Plan

A defined benefit plan is a qualified retirement account that contractually agrees to pay a specified benefit at the plan holder's age of retirement.This type of qualified plan clearly defines the amount of retirement income to be paid to the account owner.  The defined benefit is calculated using a formula stated in the plan document; common factors incorporated in the formula are the employee's pay, years of employment, and age at retirement. Read more

Defined Contribution Plan

In general, a defined contribution plan is a tax-deferred savings plan that people fund with their own money (rather than an employer) and use to save for retirement.It is the opposite of a defined benefit plan, which is typically a pension plan funded by the employer or an entity other than the person who will directly benefit from the plan. Read more

Employee Benefits Security Administration (EBSA)

The Employee Benefits Security Administration (EBSA) is the branch of the United States Department of Labor responsible for overseeing the administration and planning of employee pension funds by company investment managers. The United States Department of Labor ensures that the American workforce is treated fairly and is compensated in accordance with the law. Read more

Employee Contribution Plan

An employee contribution plan is an employer-sponsored retirement plan where employees deposit (contribute) their own money to a special account. Employee contribution plans are usually funded by contributions that are automatically deducted automatically from an employee's paycheck. Read more

Employee Retirement Income Security Act of 1974 (ERISA)

Th Employee Retirement Income Security Act of 1974 (ERISA) is an American federal statute that protects the retirement assets of Americans by establishing a set of rules that must be followed by fiduciaries to prevent misuse of plan assets. Title I of ERISA deals with protecting employee benefit rights. Read more

Graduated Vesting

Graduated vesting occurs when a financial instrument or account becomes wholly owned by an investor over time. Let's assume John Doe is eligible to participate in his company's 401(k) plan. Read more

Hardship Withdrawal

A hardship withdrawal is a premature withdrawal of money from a retirement account on account of special circumstances. Retirement plans -- for example, 401(k)s and IRAs -- have special tax treatments that encourage individuals to save. Read more

Individual Retirement Account (IRA)

An Individual Retirement Account (IRA) is a government sponsored, tax-deferred personal retirement plan.  An IRA can also be referred to as a Traditional IRA.In order to open an IRA, an individual must first establish an account with a bank, brokerage firm or mutual fund company. Read more

Joint and Survivor Annuity

A joint and survivor annuity is an annuity with two named beneficiaries.The annuity provides both beneficiaries with recurring income for life. Read more

Keogh Plan

A Keogh Plan is a tax-deferred retirement plan available to self-employed individuals or unincorporated businesses.Congress passed legislation called the Self Employed Individuals Tax Retirement Act of 1962, which established Keogh (pronounced KEY-oh) plans. Read more

Liability Matching

Liability matching is an investing strategy for investors who need to fund a series of future liabilities. Buy-and-hold and indexing strategies are about generating steady rates of return in a portfolio. Read more

Matching Contribution

The term matching contribution refers to a matching dollar amount contributed by an employer to the retirement savings account of an employee who makes a similar contribution, usually to a 401(k) plan.These are contributions made by a company in addition to and conditional upon the salary deferral contributions made by the participating employee.  Matching contributions can be made to 401(k) plans including the SIMPLE, SIMPLE IRA'S, and the 403(b) plans.These contributions are generally based on a percentage of the participant's compensation. Read more


Medicaid is a U.S.government program that provides free or low-cost health insurance coverage for low-income people. Read more

Non-Qualified Plan

A non-qualified plan is a retirement plan to which the IRS does not grant specific tax benefits. A non-qualified retirement plan is essentially whatever a qualified plan is not. Read more

Qualified Automatic Contribution Arrangement (QACA)

A qualified automatic contribution arrangement (QACA) is a way to automatically enroll employees in a defined contribution plan like a 401(k).  For example, assume that you get a new job with an employer that offers a 401(k) plan.If the employer has a QACA, you are automatically enrolled in the 401(k) plan and a certain percentage of your pay is automatically put into your retirement account each pay period. Read more

Qualified Distribution

A qualified distribution refers to a tax and penalty-free withdrawal from a Roth IRA. A qualified distribution must meet two main requirements. Read more

Qualified Reservist

A qualified reservist is a member of the military reserves who is eligible to make an early withdrawal from an individual retirement account (IRA). For example, let's assume that John is a 28-year-old Air Force reservist. Read more

Qualified Retirement Plan

A qualified retirement plan is a plan to which the IRS grants specific tax benefits. The myriad of exact requirements for qualified retirement plans are in the Internal Revenue Code section 401(a) and the Employee Retirement Income Security Act of 1974 (ERISA). Read more

Qualifying Investment

A qualifying investment is a contribution to a retirement plan made with pre-tax income. For example, let's assume that John participates in his company's 401(k) plan. Read more

Roth IRA

A Roth IRA is a type of Individual Retirement Account (IRA) for individuals who fall below certain income thresholds.One of the primary benefits to investing in a Roth IRA is that distributions are tax-free once withdrawals are made. Read more

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)

The Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) is a salary savings plan that small companies can offer their employees.The plan allows employers to match their employees' annual contributions or to infuse a smaller mandatory amount in the absence of employee contributions. Read more

Simplified Employee Pension (SEP) IRA

A simplified employee pension (SEP) is a type of individual retirement account (IRA) that can be opened by an employer on behalf of an employee or by a self-employed individual.It may also be known as a simplified employee pension individual retirement arrangement (or SEP IRA).  Once opened, the employer can make tax-deductible contributions into the account, which will grow (tax-deferred) until the employee retires. Read more

Social Security

Social security is a federal program that provides income and health insurance to retired persons, the disabled, the poor, and other groups.The program started in 1935 with the signing of the Social Security Act, which was an effort to provide a safety net for the millions of people who had suffered through the Great Depression. Read more

Tax-Deferred Annuity (TDA)

A tax-deferred annuity (TDA), commonly referred to as a tax-sheltered annuity (TSA) plan or a 403(b) retirement plan, is a retirement savings plan available to employees of certain public education organizations, non-profit organizations, cooperative hospital service organizations and self-employed ministers.  Organizations offer tax-deferred annuity plans to eligible employees for long-term investment growth, similar to a 401(k) plan.Contributions to these plans are generally in one of three forms:     The employer makes contributions to the plan through a salary-reduction agreement. Read more

Tax-Deferred Savings Plan

A tax-deferred savings plan is an account that allows the account holder to postpone paying taxes on the investments in the account. A 401(k) plan is the most common example of a tax-deferred savings plan. Read more

Tax-Free Savings Account (TFSA)

In Canada, a tax-free savings account (TFSA) is a federal program that allows Canadians to avoid paying taxes on interest earned in specific savings accounts. Canadians with valid Canadian Social Insurance Numbers can open a tax-free savings account (TFSA). Read more

Tax-Sheltered Annuity (TSA)

A tax-sheltered annuity (TSA), also referred to as a tax-deferred annuity (TDA) plan or a 403(b) retirement plan, is a retirement savings plan for employees of certain public education organizations, non-profit organizations, cooperative hospital service organizations and self-employed ministers. Organizations offer tax-sheltered annuity plans to eligible employees for long-term investment growth, akin to a 401(k) plan. Read more

Withdrawal Penalty

A withdrawal penalty occurs when a depositor or investor withdraws funds from an account before an agreed-upon withdrawal date for disallowed purposes or in a disallowed manner. Individual retirement accounts (IRAs) are one type of investment often associated with withdrawal penalties. Read more

Year's Maximum Pensionable Earnings

A year's maximum pensionable earnings is what the Canadian government uses to determine the maximum amount a person can get from the Canada Pension Plan. The Canada Pension Plan is similar to the Social Security program in the United States. Read more