Tax code section requiring minimum distributions after age 70 ½.
The transfer of a small amount of funds, less than $5,000, from one IRA to another owned by the same person without the owner's authorization.
A person designated by a participant or by the plan who may become entitled to a benefit under the plan.
A period of time when participants are not permitted to take loans, obtain distributions, or direct investments. A blackout period most commonly occurs during a conversion of plan's assets from one provider to another provider.
Break in Service
Generally, a 12-month computation period in which an employee is credited with no more than 500 hours of service.
Applies to plans that have a provision in their document that forces the distribution of a terminated participant. This can happen without the participant's consent, but is only allowed if the benefit is less than $5,000. Unless the participant elects otherwise, amounts greater than $1,000 must automatically be rolled over into an IRA. Distributions of $1,000 or less can be distributed directly to the participant. Distributions are subject to federal withholding tax, and are subject to the 10% early withdrawal penalty if not rolled over.
A cliff vesting schedule vests 100% of employer contributions after a specified number of years of service. After three years of service, benefits must be fully vested.
The process of changing from one service provider to another.
A distribution to an employee made in the form of a direct trustee-to trustee transfer from a qualified retirement plan to an eligible retirement plan.
A loss of benefits under the plan, a vesting concept relates to the loss of a participants non-vested benefit when certain events occur.
Graded Vesting Schedule
A schedule used for vesting purposes, in which the vesting occurs over a period of five to 15 years. A six year graded vesting schedule, a common vesting schedule, is where vesting starts with the second year of service at 20% and the participant fully vests after the sixth year of service.
A hardship withdrawal occurs when you take money out of your 401(k) or other qualified retirement savings plan to cover a pressing financial need. You must qualify to withdraw by meeting the conditions your plan imposes in keeping with IRS guidelines. If you're younger than 59 1/2, you may have to pay a 10 percent penalty, plus income tax, on the amount you withdraw, and you may not be permitted to contribute to the plan again for a period of time.
A withdrawal of vested money from a qualified plan to an employee who is still actively employed.
Individual retirement accounts are self-directed investment accounts that provide the incentive of tax-deferred or tax-free earnings on assets in the account. If you earn income, or are married to someone who does, you can put up to $5,000 per year in an IRA in 2011. If you're 50 or over, you can invest an additional $1,000.
Joint & Survivor Annuity
An annuity payable at least annually for the life of the participant, with a survivor annuity payable for the life of the participants spouse following the participants' death.
An annuity payable at least annually for the life of the participant, with no benefits payable after the participants’ death.
Lump Sum Distribution
A one-time payout of assets in an account, typically a retirement savings account. When you retire or change jobs, you can take a lump-sum distribution as cash, or you can roll over the distribution into an individual retirement account (IRA).
A Qualified Domestic Relations Order is a judgment, decree or order that creates or recognizes an alternate payee's (such as former spouse, child, etc.) right to receive all or a portion of a participant's retirement plan benefits.
Qualified Joint And Survivor Annuity. An annuity payment from a qualified plan or 403(b) account that provides a life annuity to the participant and a survivor annuity for the spouse after the participant’s death.
A distribution in which assets from one tax-deferred or tax-free investment to another.
The structure for determining participants' right to company contributions that have accrued in their individual accounts. In a plan with immediate vesting, company contributions are fully vested as soon as they are deposited to a participant's account. Cliff vesting provides that company contributions will be fully vested only after a specific amount of time, and that employees who leave before this happens will not be entitled to any of the company contributions (with certain exceptions for death, disability or retirement). In plans with graded vesting, vesting occurs in specified increments.