• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

A Retirement Plan Glossary

Posted on: Sunday, 26 March 2006, 21:00 CST

A RETIREMENT PLAN GLOSSARY:

Pension plan: Employer-sponsored retirement plan. Employer is responsible for funding the benefit and investing the money wisely. Also know as a defined benefit plan because it provides a fixed monthly benefit at retirement.

401(k) plan: Tax-advantaged retirement plan funded by the employee with optional contributions from the employer. The employee is responsible for managing how the money is invested. Also known as a defined contribution plan because employees specify how much of their paycheck is to be contributed to the account.

Pension plan freeze: Pension benefits are frozen as of a date specified by the employer. Employees are entitled to whatever monthly pension benefit they have earned as of that date, but the size of their pension check won't increase no matter how long they work for the company. A freeze does not affect benefits being paid to those already retired.

Rollover: When workers switch jobs, they can take their 401(k) money with them by rolling it over into their new employer's 401(k) plan or into an IRA account. In most cases, they can also keep it in their former employer's 401(k) plan.

(Distributed by Scripps Howard News Service, http://www.shns.com)

Source: Scripps Howard News Service

More News in this Category