Glossary of Common Terms for Retirement Savings
Helpful retirement savings portability terms and definitions.
An employer-sponsored retirement savings plan, where an employee can participate and contribute a percentage of their income to, up to a maximum. Contributions and earnings are typically tax-deferred.
A service offered by Retirement Clearinghouse, where an existing plan participant can elect to consolidate their retirement savings into their current-employer's plan. The Assisted Roll-In service accomplishes this by delivering each participant with expert, end-to-end assistance, making the process easy.
A process that can automatically move small-balance (less than $5,000) retirement savings forward, when an employee changes jobs.
The final step in auto portability, where a participant in a new plan has their retirement savings from a previous plan automatically rolled into their active plan.
An automatic rollover is a process that is often used by defined benefit and defined contribution plans, where former employees with plan balances of less than $5,000 can have their balances forced out of the plan, and moved into a safe harbor IRA.
A person designated to inherit the balance of a retirement savings account, upon the accountholder's death. The beneficiary is typically a spouse or is related to the primary accountholder.
The process of initially defining or changing the beneficiary of a retirement savings account.
Prematurely distributing the balance of a retirement savings account, before normal retirement age. Premature distributions result in taxes and penalties payable.
A tool that calculates the cost of prematurely cashing out retiremeht savings.
A request to re-print a distribution check that has been lost or not received.
A beneficiary whose inheritance is contingent upon the accountholder and the primary beneficiary both being deceased.
Contributions are deposits or additions to a retirement savings account, and are subject to limits.
An employer-sponsored plan in which an employee's eventual pension payments are calculated according to length of service and the salary they earned at the time of retirement.
A defined contribution (DC) plan is an employer-sponsored retirement plan in which the employer, employee or both make contributions on a regular basis. In defined contribution plans, future benefits fluctuate on the basis of investment earnings. Taxes are generally deferred until distributions (withdrawals) are taken. A 401(k) plan is a type of defind contribution plan.
Distributions are withdrawals from a retirement savings account. Depending upon the accountholder's age and the type of contributions, the distributions may have varying tax consequences.
A process that is regulated by states and determines how unclaimed property must be handled and eventually turned over to the state of residence of the property holder. Individual Retirement Accounts (IRAs) can be subject to escheatment under certain conditions, which vary by state.
A type of savings account designed to help save for retirement. An IRA offers many tax advantages. There are two different types of IRAs: Traditional and Roth IRAs.
In Auto Portability, the process used to locate a participant's active account at their current employer, for the purpose of consolidating their small balance account from a prior employer.
A participant whose current address or status is unknown or incorrect. A missing participant generally results when their mailings are returned, required minimum distributions are not taken, and/or distribution checks are returned or go uncashed.
An employee who participates in their employer's retirement savings plan.
A service provider whose responsibility it is to account for the retirement assets in an employer-sponsored plan.
A minimum distribution (determined by IRS formulas) from a retirement savings account that is required when the accountholder attains 70-1/2 years of age.
The ability to move & consolidate retirement savings, as employees change jobs. Ease of portability generally results in few premature cash-outs of retirement savings.
A type of rollover, except the retirement funds are "rolled in" and consolidated into an active 401(k) plan, vs. an IRA.
The movement of funds from one retirement plan to another retirement plan.
An individual retirement account (IRA) that allows a person to set aside after-tax income up to a specified amount each year. After age 59-1/2, both earnings on the account and withdrawals are tax-free.
A Safe Harbor IRA is a qualified retirement account, create when a small-balance account (less than $5,000) has been automatically rolled over by your former employer to a safe harbor IRA provider.
A person or organization that processes claims and performs other administrative services for an employer-sponsored retirement savings plan.
A Traditional IRA is a way to save for retirement that offers tax advantages. Contributions made to a traditional IRA may be fully or partially deductible, depending on one's circumstances. Generally, amounts in a traditional IRA (including earnings and gains) are not taxed until distributed.
The time required to spend with an employer in order to collect all employer "matching" contributions.