A type of savings plan, established for the benefit of employees, that allows employees to elect to defer a certain percentage of their compensation to provide for their retirement benefits.

The amount of benefit a participant has accumulated or that has been allocated to him or her as of a particular point in time.

A person skilled in mathematical calculations to determine insurance risks, premiums, and so forth; a statistician.

A fixed sum of money, usually paid to a person at fixed times for a fixed time period or for life.

A type of qualified plan that does not involve a qualified plan trust. Contributions to an annuity plan are used to buy annuity policies directly from an insurance company.

An insurance policy that may be purchased to provide an annuity.

A part of an employee contract, partnership agreement, or agreement to sell a business in which a person promises not to engage in the same business for a certain amount of time after the relationship ends.

A retirement plan in which the benefit payable to the participant is definitely determinable from a benefit formula set forth in the plan.

A retirement plan that establishes individual accounts for each plan participant and provides benefits based solely on the amount contributed to the participants’ accounts.

A letter issued by the IRS in response to an inquiry as to the tax implications of a given situation or transaction.

(29 U.S.C. 1000) A federal law that established a program to protect employees’ pension plans. The law set up a fund to pay pensions when plans go broke and regulates pension plans as to vesting (when a person’s pension rights become permanent), nondiversion of benefits to anyone other than those entitled, nondiscrimination against lower-paid employees, and so on.

An employee benefit plan that provides participants with welfare benefits such as medical, disability, life insurance, dental, and death benefits. A welfare benefit plan may provide benefits either entirely or partially through insurance coverage.

An agreement entered into between an employer and an employee to set forth the rights and obligations of each party with regard to the employee’s employment.

Stock awards, stock options, and other compensation paid to employees and executives in the form of equity of the corporation.

An employment contract or termination agreement that gives a top executive a big bonus or other major benefits if the executive loses his or her job (usually due to a change in corporate control).

A bank or investment account into which some persons may set aside a certain amount of their earnings each year and have their interest taxed only later when withdrawn.

A type of retirement plan that is integrated with the employer’s contribution to Social Security on behalf of the participant.

A tax-free retirement account for persons with self-employment income.

A defined contribution pension plan whereby the employer contributes a fixed amount based on a formula set forth in the plan that is based on the employee’s salary.

An individual or entity responsible for calculating and processing all contributions to and distributions from a qualified plan, and for all other aspects of plan administration.

Employees who meet with certain minimum requirements to participate in a qualified plan.

A plan established by an employer to distribute part of the firm’s profits to some or all of its employees.

A pension plan that meets IRS requirements for the payments to be deducted by the employer and initially tax-free to the employee.

Contributions made to a qualified plan by the sponsor, participants, or third parties. Limitations on the amount of contributions are set forth in the Internal Revenue Code.

Distributions made to qualified plan participants or their beneficiaries from a qualified retirement plan trust, usually on the retirement, death, or termination of employment of the plan participant.

A trust managed by trustees who are appointed by the qualified plan sponsors to manage the assets of the qualified plan.

An employer’s contribution to an employee’s IRA (individual retirement account) that meets certain federal requirements. Self-employed persons often use SEPs.

In ERISA terms, an employer who adopts a qualified plan for the exclusive benefit of the sponsor’s employees and/or their beneficiaries.

A type of defined contribution plan, similar to the profit-sharing plan, in which the main investment is in the employer’s stock.

The right to buy a designated stock, at the holder’s option, at a specified time for a specified price. Stock options are often granted to executives and key employees as a form of incentive compensation.

A document required by ERISA to communicate the contents of a qualified plan to plan participants.

A type of qualified plan that has many characteristics of both a defined benefit plan and a defined contribution plan.

Absolute, accrued, complete, not subject to any conditions that could take it away; not contingent on anything.