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Word
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Definition
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401(k) Plan
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401(k) Plan: A tax-qualified defined contribution retirement plan offered by a corporation and funded by employees' pretax contributions. Typically permits employees to defer a limited amount of their pretax salary into any of several diversified investment options. Investments build up tax-free until distributed, and corporate sponsors often match part or all of employees' contributions with tax-deductible corporate contributions. See also Keogh Plan.
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403(b) Plan
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403(b) Plan: A voluntary "quasi-group" tax-qualified plan generally sold on a payroll deduction basis to teachers, government employees and employees of hospitals and nonprofit organizations, and often viewed as an alternative to 401(k) plans. Premiums paid by such organizations on an annuity contract for an employee are not taxable and, like other annuities, the inside build-up is tax-deferred. Also referred to as Tax-Qualified Annuities (TQAs) or Tax-Sheltered Annuities (TSAs).
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404 (c )
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404 (c ): The section of the ERISA code, clarified by Department of Labor regulations, that describes employers' (and other plan fiduciaries') role and ultimate potential liability for employees' inappropriate investment decisions under defined contribution plans, and the conditions under which employers may be relieved of liability.
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457 Plan
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457 Plan: A tax-qualified deferred compensation retirement plan offered to employees by state or local governments, municipalities and organizations that obtain their funding from government sources.
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