Nondeductible contribution
Definition A contribution for which no tax-deduction is allowed. The following are examples of contributions that can be deducted. Traditional IRA: An individual who is
401K
A tax-deferred employer-provided retirement savings account, to which eligible employees may defer part of their salary. Salary deferral can be pre-tax or post-tax include Roth 401(k)s.
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Nest Egg
Definition Savings earmarked to finance a special project , task or event. For retirement planning purposes, retirement nest egg is the amount saved to finance
Orphan plan
Definition A defined contribution plan for which there is no plan sponsor or other plan fiduciary willing to act with respect to the plan. Any
Opinion letter
Definition A written statement issued by the IRS to a plan sponsor as to the acceptability (for purposes of qualified plans) of the form of
Omnibus Budget Reconciliation Act (OBRA )
Definition There are several versions of OBRA OBRA 90 increased the employer reversion penalty from 15 to 50% OBRA 93 instituted the compensation cap Section
Prohibited Transaction
Definition A transaction that would result in loss of tax-deferred status or other penalties being assessed on the retirement plan or retirement plan assets involved
Prohibited transaction class exemption (PTCE)
Definition An administrative exemption that would allow an otherwise disallowed person to engage in transactions that would otherwise be considered prohibited transactions. PTCEs are granted
Profit sharing plan
Definition An employer-sponsored qualified-retirement-plan, established by an employer for the benefit of its employees and their beneficiaries. Profit sharing plans are defined contribution plans, funded
Prototype Plan
Definition A plan that is made available by a prototype sponsor for adoption by employers and under which a separate funding medium is established for
Pro rata allocation
Definition Allocation method where allocations are made to participants as a percentage of compensation, with each participant receiving the same percentage or being charged the
