A DB Scheme, or Defined-Benefit Pension Scheme, promises a specified pension payment, lump-sum, or combination thereof on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service, and age.
A type of pension plan where the contributions are fixed, but the benefits vary based on investment returns. Employees and sometimes employers contribute to a tax-deferred account with flexible investment options.
Distress termination is a type of plan termination that occurs when a company is in severe financial distress, such as bankruptcy, and cannot afford to continue its pension plan.
In the context of a pension or a profit-sharing plan, forfeitable benefits are those in which a participant has no ownership rights until specific length-of-service or performance requirements for vesting have been met.
A funded retirement plan is a type of retirement savings arrangement where contributions are made to a dedicated fund to provide future retirement benefits.
A pension plan funding instrument in which contributions paid by an employer are deposited to accumulate at interest, and an immediate annuity is purchased upon retirement for the employee. The benefit is determined by a formula and the investment earnings on funds left to accumulate at interest.
A provision of the IRA law enabling persons receiving lump-sum payments from their company's pension or profit-sharing plan due to retirement or other termination of employment to roll the amount over, tax-free, into an IRA investment plan within 60 days.
A US savings scheme designed to facilitate pension plans for self-employed individuals or employees of small, unincorporated businesses, with tax benefits deferred until withdrawals are made.
A noncontributory qualified pension or profit-sharing plan (NQP/PSP) is a retirement plan entirely funded by the employer, with no contributions required from the employees. These plans are established for the employees' benefit, ensuring financial security upon retirement.
Past service credit refers to the recognition of service time an employee has accrued prior to being a member of a pension plan, which is used to determine pension benefits.
A pension plan is a retirement savings program sponsored by an employer that provides its employees with regular income post-retirement. There are various types of pension plans, each with different rules regarding contributions, benefits, and tax treatment.
Prior service cost refers to the obligations a company incurs for employee benefits under a pension plan related to service provided by the employee before a specific date.
A pension or profit-sharing plan set up by an employer for the benefit of employees, adhering to IRS rules, where contributions are deductible for the employer, trust income is not taxable, and employees are taxed only upon distribution.
Rollover refers to replacing a loan or debt with another or changing the institution that invests one's pension plan, without recognition of taxable income.
A Simplified Employee Pension (SEP) Plan is a retirement plan specifically designed for small businesses and self-employed individuals, allowing them to contribute toward retirement savings for themselves and their employees.
Standard termination refers to the process by which a defined benefit pension plan is voluntarily ended by an employer following specific regulatory guidelines.
The entitlement of a pension plan participant to receive full benefits upon reaching the normal retirement age or a reduced benefit upon early retirement, regardless of their employment status with the same employer.
A voluntary plan, short for voluntary deductible employee contribution plan, is a type of pension plan where the employee elects to have contributions (which, depending on the plan, may be before or after-tax) deducted from each paycheck.
