Financial Glossary
Clear definitions for complex retirement and tax planning terms. Designed to help you make informed decisions.
Cash Balance Plan
A type of defined benefit pension plan that allows for high tax-deductible contributions. It combines features of a traditional pension with a 401(k).
Defined Benefit Plan
A retirement plan that promises a specific monthly benefit at retirement. The employer is responsible for investment risk and funding.
Third-Party Administrator (TPA)
An organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity.
401(k) Profit Sharing
A defined contribution plan where employees can defer salary and employers can make discretionary contributions based on profits.
Actuary
A business professional who deals with the measurement and management of risk and uncertainty, essential for designing defined benefit plans.
Tax Deduction
A reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income.
Cross-Testing
A nondiscrimination testing method that allows for different contribution rates for different groups of employees, often favoring older or higher-paid owners.
Safe Harbor 401(k)
A type of 401(k) plan that automatically passes IRS nondiscrimination tests in exchange for mandatory employer contributions.