cpcu 556 ch 10

  1. Guaranteed income floor
    The essential pupose of Social Security; to prove a basis or "floor" on which an individual and his or her employer can build a more comfortable retirement income
  2. Qualified retirement plans
    A tax term that refers to plans filed under the IRS, which are accorded special tax advantages if they meet certain nondicrimination and other requirements of the law
  3. Defined benefit plan (DB) (pension)
    A qualified retirement plan were benefits are expressed as a specified benefit at retirment. May be a dollar amount, or determined by a specified formula, contributions to fund the plans vary
  4. Defined contribution (DC) plan (individual account plan)
    qualified retirement plan where an individual account for each participant is provided for, with specified or variable contributions to those accounts
  5. Qualified preretirement survivor annuity (QPSA)
    Plan retirement benefits payable to a married qualified retirement plan participant provided in annuity form unless the participant elects to waive the qualified and survivor joint annuity from or unless a profit sharing savings, or stock bonus plan meets the requirements for exclusion from the retirment equity act rules
  6. Compensation cap
    A dollar limit, indexed for inflation, on the amount of a participants annual compensation that can be taken into account in determining contributions to or benefit from the participants qualified retirement plan
  7. Vesting
    A participant's nonforfeitable right in their account balance under a DC plan or to an accrued benefit under a DB plan that results from employer contributions to the plan
  8. Cliff vesting
    Alternative minimum vesting schedules in qualified retirement plans wherby a participant is 100% vested upon completion of five years of service
  9. Integrated plan
    a retirement plan where either benefits or contributions under SS are factored into account when establishing the benefits or contributions under the plan
  10. Permitted disparity (integration) rules
    Basic methods of integrating defined benefit retirment plans; a smaller benefit is payable on earnings up to SS integration level then on earnings above that level
  11. Offset plan
    method of integrating defined benefit retirement plans; a pension benefit is calculated without regard to SS benefits, and then a percentage of the SS benifit is usually deducted from the pension benefit
  12. Nonqualified retirement plan
    A retirement plan that does not meet the requirements for qualification set by the tax law; it can be structured to favor highly compensated employees
  13. Pension plan
    A qualified retirement plan maintained by an employer primarily to provide defenitely determinable benefits to employees or their beneficiaries at and after retirement
  14. Flat amount formula
    A defined benefit pension plan formula in which all participants are given the same benefit upon retirement
  15. Flat percentage formula
    defined benefit pension plan formula that relates benefits to earnings; every employee completing a minimum number of years of credited service receives at retirement a pension equal to a given percentage of their average annual compensation
  16. Flat amount unit benefit formula
    defined benefit pension plan formula that relates benefits to years of service but not to earnings; an employee is given a flat amount of benefit per month for each year of credited services
  17. Percentage unit benefit formula
    defined benefit pension plan formula in which an employee is given a percentage of benefit per month for each year of credited service
  18. Pension Benefit Guaranty Corporation (PBGC)
    A federal corporation established by the Employee Retirement Income Security Act to fund an insurance program for employees and pensioners of companies that have gone bankrupt or whose plans have gone bankrupt or whose plans have terminated, ensuring vested benefits of defined benefit pension plans up to certain amount
  19. Profit sharing plan
    qualified defined contribution retirment plan whose employee contributions are usually based on the employer's profits and hence do not provide benefits that are definitely determinable. An employer contributs to an employee's individual plan account without current or accumulated profits, and contributions can be made without regard to net profits
  20. Savings (thrift) plan
    A qualified DC retirement plan that permits an employee to make voluntary contributions of a percentage of their compensation, and then the employer contributes a specified percentage o9f the employee's contribution up to a certain limit. Employees may have the option of making additional, unmatched contributions
  21. Participant directed account
    A savings plan account that permits the participant to decide how their account balnace will be invested withing the investment funds provided by the employer under the plan
  22. Cash or deferred arangement (CODA), Sectioon 401k option
    Savings arrangement in which employees are able to make contributions to retirement plans or a before tax basis
  23. Hybrid qualified retirment plan
    qualified retirement plan that exhibits some characteristics of DB plans and some characteristics of DC plans
  24. Cash balance plan
    Hybrid qualified retirement plan that is technically a DB plan but is structured to look participant wise like a DC plan. The employer contributes a percentage of each employee's compensation, and te contributions are pooled for all participants; however a hypothetical account is maintained for each participant to which a fixed percentage of the participant's compensation and a specified interest rate are credited each year
  25. Target benefit plan
    Hybrid qualified retirment plan that is technically a DC plan. However, an employer's annual contributions to the plan are based on a target benefit formula with given acturial assumptions that is the same kind of formula that would be used in a DB plan
  26. Floor offset plan
    hybrid qualified retirement plan that involves an employer having both a DB plan and a DC plan. The participant receives the larger of the retirement benefits produced by each of these plans but not the benefits from both. In practice, the benefits produced by the DB plan are reduced by a participant's account balance in the DC plan
  27. HR-10 (Keogh) plan
    A formula arrangement whereby a self employed person may establish a programn to provide tax favored retirement benefits for himself or herself and any eligible employees
Card Set
cpcu 556 ch 10
cpcu 556 ch 10