Annual Required Contribution Employer contributions that are required by law to be made annually. (For example, SIMPLE-IRA’s require that the employer make a contribution to participant accounts for a particular plan year).
Asset Allocation The mix of investments within your financial plan. Generally, assets should be invested in a combination of investment options ranging from conservative to aggressive. In most cases, the most appropriate mix varies depending on age and willingness to accept risk in exchange for the chance to earn greater earnings.
Asset Class A category of investments, such as stocks, bonds, or cash equivalents.
Automatic Enrollment Safe Harbor 401(k) Employers can offer Automatic Enrollment 401(k) Plans, which automatically enroll all employees (unless they opt out) and deduct contributions from their paychecks.
Participant Loan A feature of some retirement plans allowing participants to borrow the lesser of up to 50% of their vested balance or $50,000. Certain restrictions apply, including the time period for repayment, the interest rate and who is eligible for a loan.
Partnership A legal relationship between two or more persons who join to conduct business with each contributing money, property, labor or skill. Each person receives a share in the profits or losses of the business.
Plan Document The written instrument setting forth the terms of a retirement plan. Each plan covered by ERISA (Employee Retirement Income Security Act) must have a written plan document.
Profit Sharing Plan Types of retirement plan under which an employer may, under the terms of the plan, make fixed or discretionary contributions. These contributions are subject to limits set by the Internal Revenue Code and may be — but are not required to be — tied to profits.