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
IRA
Individual retirement accounts include traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs. Traditional and Roth IRAs are funded by the individual owner. SEP IRAs are funded by employers. SIMPLE IRAs are generally funded by employers and employees. Special tax rules apply to these accounts.
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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
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
Power of Attorney (POA)
Definition Legal document wherein an individual authorizes another person ( the attorney-in-fact) to act on behalf of another person, by carrying out certain transactions. The
Plan year
Definition A 12-month period of which the operation of the plan is based. The plan year can be a calendar-year or a fiscal-year. Referring Cite
Plan agreement ( plan agreement)
Definition The document that explains the terms and conditions under which the plan must operate. For IRAs, the plan agreement is the IRA adoption agreement.
Plan administrator
Definition The person or party responsible for handling the day-to-day administrative functions of the plan. Responsibilities of the plan administrator include maintaining plan records, preparing
Periodic payment (periodic distribution)
Definition Periodic payments are made in installments at regular intervals over a period of more than 1 year. They may be paid annually, quarterly, monthly,
