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 But the tax reform act of 1986 limited their use as short-term savings plans by imposing a 10% penalty on all money withdrawn before retirement.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
Person other than the annuitant as designated by the policyholder on whose life expectancy the annuity payment is also based. ...
Coverage for sample merchandise while in the custody of a salesperson. ...
Policy that pays a dividend to its owner. ...
Insurance policy for which the required premium has been paid. ...
Holding company established by a mutual insurance company. The mutual insurance company has 100% ownership of the holding company. ...
Employee benefit plans under which both the employee and the employer pay part of the premium. Contribution ratios vary. For example, an employer contributes two dollars for every dollar ...
Addition to a business property insurance policy to cover loss of earnings, subject to a monthly limit, in the event that property of an insured is destroyed and a business cannot continue. ...
Actuary, appointed by the life insurance company, required by the national association of insurance commissioners (naic) under the naic: standard valuation law to provide an opinion as to ...
Eligible rollover distribution that is paid directly from an employee's employee benefit insurance plan to the employee's individual retirement account (IRA) or to another plan maintained ...
Have a question or comment?
We're here to help.