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A 401(k) plan is an employer-sponsored retirement plan, which allows the employee to set aside tax-deferred income for their retirement and possibly be matched by their employer. The employer however is not required to do so.
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A 403(b) plans are employer-sponsored retirement plan that tax-exempt entities offer their employees. Employees can set aside tax-deferred income for their retirement and lower their taxable income.
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Annuity is an insurance product that offers investors a series of equal payments that are paid in regular intervals.
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A bond is a written or typed agreement that, once signed, is a promise to pay a certain sum or meet a specified condition by a certain time or date.
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A capital gain or loss is calculated by taking the purchase price of a capital asset minus the sales price of that same asset. If the difference between the two is positive, then it is considered a financial gain. If the difference between the two is negative, then it is considered a financial loss.
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A certificate amount is issued by banks as a Certificate of Deposit (CD). This is a perfect way to save when you want your money to earn more than a traditional savings account and do not need access to your savings for a specific period of time.
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A defined benefit plan is a retirement plan in which an employee who is retiring will receive a guaranteed retirement amount, usually paid out in increments.
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The amount that an employer may contribute to its employee’s retirement fund. This amount is usually represented as a formula based on the employee’s contributions.
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An employer-sponsored retirement plan is a tax-deferred retirement plan employers offer their employees as a way to save for retirement and lower their taxable income. Common employer-sponsored retirement plans are 401(k) plans, 403(b) plans, and simplified employee pension plans.
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Fixed income is an income that pays out a fixed sum at a give interval. A common source of fixed incomes is Social Security. Other sources of fixed incomes are certificate accounts, Social Security benefits, pension benefits, annuities, and bonds.
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IRAs are tax-deferred retirement accounts that permit an individual to put aside money each year for retirement. Withdrawals begin at the age of 59 ½ or later; you may withdraw earlier but with a 10% penalty).
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People who are self-employed or own unincorporated business can use a Keogh plan as a tax-deferred qualified retirement plan.
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A pension is set up by an employer for an employee, where the employee receives the pension funds after retiring.
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These can be either pensions or qualified savings plans established by an employer for the benefit of the employees. Qualified retirement plan must conform to IRS rules.
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Risk is the measure of the probability of financial loss or gain.
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A type of retirement plan that the employer contributes to an employee’s IRA. Contributions may be made up to a certain limit and are immediately vested.
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An annuity product where an individual’s account value may fluctuate based on the value of the respective insurance company’s investments.
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The yield is the amount of current income provided by an investment.
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