Section 401 (k) Plan (salary Reduction Plan)
Definition of "Section 401 (k) plan (salary reduction plan)"
Employer sponsored retirement savings program named for the section of the Internal Revenue Code that permits it. These plans allow employees to invest pre-tax dollars that are often matched in some portion by employers. Because of their flexibility, 401 (k) s became a popular employee benefit during the 1980s. But the tax reform act of 1986 limited their use as short-term savings plans by imposing a 10% penalty on all money withdrawn before retirement. It also reduced the maximum annual contribution from $30,000 to $7000 and tightened nondiscrimination rules. Employees may still borrow the money, however, and pay themselves interest.
Popular Insurance Terms
Same as term Cancel: termination of a policy. Contract may be terminated by an insured or insurer as stated in the policy. If the insurance company cancels a policy, any unearned premiums ...
Named peril policy is how it’s called in the Real Estate Industry the insurance policies that specify the perils it covers. Under a named peril policy, if anything that isn’t ...
Requirement that the insured must have stayed in a hospital or other health care facility for at least a specified period of time before being entitled to receive insurance benefits. This ...
Coverage against foreign country expropriation underwritten by the overseas private investment corporation (OPIC) for U.S.-owned companies investing in given developing countries. ...
Same as term Contribution: principle of equity in property, casualty, and health insurance. When two or more policies apply to the loss, each policy pays its part of the loss, unless its ...
Investment risk associated with the psychology of the market in that emotions affect the price of a company's stock that, in most instances, has nothing to do with the current or potential ...
Endorsement to an automobile policy that pays specified amount for towing and related labor costs. ...
Right of a beneficiary of a life insurance policy to exchange the future installments due that beneficiary for a lump sum distribution. ...
Agreement among insurance companies through which a multinational employer is permitted to purchase employee benefits coverage's for two or more of its overseas subsidiaries under a single ...
Have a question or comment?
We're here to help.