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Glossary

Account balance

The amount of money that has accumulated in your account under a defined contribution plan.

 

Actuarial equivalent

If two different forms of benefit payments are actuarial equivalents, then their present values under the terms of your plan are the same. For instance, a single life annuity and a term certain annuity for 10 years may be actuarially equivalent. You might have a choice between $100 per month for life under a single-life annuity, or instead $200 per month for 10 years under a 10-year certain annuity. This is because it is expected that more payments will be made under the single-life annuity than the 10-year certain annuity. The actuarial equivalence of different forms of benefits is determined under the terms of your plan based upon factors such as your life expectancy, the rate of interest under your plan, etc.

 

Annuitant

The person who receives payments under an annuity.

 

Annuity

A form of benefit in which payments are made at regular intervals. The most common form of annuity is one that pays monthly benefits for life.

 

Annuity starting date

The date you start to collect retirement benefits.

 

Annuity with a term certain

An annuity in which you are guaranteed to receive annuity payments for a certain number of years. The "term certain" is the number of years (or other period) for which payments are guaranteed.

 

Automatic form of benefit

The form of benefit paid to you if you do not select a different form. Sometimes referred to as "normal form of benefit."

 

Beneficiary

The person you name to receive benefits upon your death.

 

Benefit

The type of payment you will be entitled to upon retirement from your plan.

 

Cash option

A term that is sometimes used to describe a lump-sum distribution. Under a cash option, you would receive your benefit all at once, often in one check from your plan.

 

Cash-out

A distribution to you, all at once, of alt of your benefit from your plan.

 

Cash refund annuity

An annuity in which you are guaranteed to receive a certain amount of money. If you die before you receive this set amount, your beneficiary will receive the remaining value.

 

Consent

Agreement

 

Contingent annuitant

The person you name to receive the survivor portion of a joint and survivor annuity.

 

Contribution

The amount that your employer puts into the plan during a year. Some plans allow (or require) you to make contributions as well.

 

Defer

Postpone or delay.

 

Defined benefit plan

The type of plan under which your benefit is "fixed." This means that your employer promises to pay you a certain amount after you retire. This amount is usually based on how many years you have worked for the company and how much you earned during that time.

 

Defined contribution plan

A plan to which your employer contributes a certain amount each year; The amount your employer contributes may vary from one year to the next. Your benefit from this type of plan is based on the amount of money that has accumulated in your account when you retire.

 

Designated beneficiary

Generally the person you name to collect benefits payable on your behalf after your death.

 

Distribution

The payment of your benefits to you (or your beneficiary) from your plan. Distribution can occur at once, in a lump sum, or over a period of time.

 

Irrevocable

A decision that you cannot change or take back.

 

Joint and contingent annuity

Another term for a joint and survivor annuity.

 

Joint and survivor annuity

An annuity that pays benefits over your lifetime and over the lifetime of the person you name as your beneficiary (such as your spouse.)

 

Life expectancy

The number of additional years you are expected to live (on average) at a given age.

 

Lump-sum benefit

A form of benefit payment in which your plan pays you your entire benefit at once, or possibly in two or three parts over a short period of time.

 

Money purchase pension plan

The type of defined contribution plan in which your employer contributes a certain amount of money to the plan each year. When you retire, you get a benefit that is based on the amount of money accumulated in your plan account.

 

Non-forfeitable benefit

A vested benefit. You cannot lose this benefit even if you quit working for your employer.

 

Normal retirement age

The age at which you are entitled to retire under your plan with a full benefit.

 

Optional form of benefit

Another form of benefit you may take. For instance, your plan's normal form of benefit may be an annuity. An optional form of benefit may be a lump-sum distribution.

 

Participate

To be a member of a plan. If you "participate" in a plan, you are said to be a plan "participant." You may also be said to be "covered" by that plan.

 

Pension

The benefit paid to a person from a retirement plan.

 

Periodic payments

Payments made at regular intervals such as monthly or bi-weekly.

 

Plan sponsor

Your employer.

 

Predeceases

Dies before. If your spouse "predeceases" you, that means that he or she dies before you do.

 

Present value

A current single value for a benefit or a series of benefit payments to be made in the future under the terms of your plan.

 

Profit-sharing plan

The type of defined contribution plan in which your employer contributes a certain amount of money to the plan each year or on a regular basis. The amount contributed usually is based on your employer's profits for that year.

 

Qualified joint and survivor annuity (QJSA)

A joint and survivor annuity that meets certain rules. Generally a QISA will pay a certain amount while both you and your spouse are alive and a lesser amount to your spouse if he or she is alive at your death.

 

Qualified plan

A plan that complies with the rules set forth in the Internal Revenue Code.

 

Qualified pre-retirement survivor annuity (QPSA)

An annuity to which your spouse may be entitled if you die before you have started to collect your retirement benefits.

 

Retroactive

Made effective as of an earlier date:

 

Roll over

To take your money in a lump-sum distribution from your plan and put it into an Individual Retirement Account or Individual Retirement Annuity (IRA). (Only your employer's contributions or your before-tax contributions may be put into an IRA. Your after-tax employee contributions may not be rolled over.) You have 60 days to make a rollover after you receive the lump-sum distribution from your plan.

 

Single-life annuity

An annuity that pays benefits over your lifetime.

 

Single-sum payment

A form of benefit payment in which you receive all of your benefit at once. Another term for this is "lump-sum distribution."

 

Spouse

Your husband or wife.

 

Spousal consent

The agreement of your husband or wife to change the benefit that otherwise would be paid to you automatically from your plan. Often, this is agreement not to have a survivor benefit paid to your spouse upon your death or to have the survivor benefit paid to someone who is not your spouse upon your death.

 

Straight-life annuity

An annuity paid at regular intervals over your lifetime. Another term for this is a "single-life annuity."

 

Survivor

A person who lives longer than another person.

 

Termination of employment

The time at which you quit working for your company.

 

Vested benefit

A non-forfeitable benefit. If you are vested in a benefit, you have a right to that benefit even if you quit working for your employer.

 

Waive

Give up or relinquish. If you and your spouse "waive" a QJSA, then you have decided not to receive your benefits in that form.