A plan that allows individuals who have invested in an IRA or another qualified retirement plan to withdraw funds prior to the age of 59.5 and avoid income tax and early-withdrawal penalties. Typically, an individual who removes assets from a plan prior to age 59.5 will face taxes on any income generated by the fund - interest income or capital gain - and will also be subject to a 10% penalty. With substantially equal periodic payments, the funds are placed into an SEPP plan that pays the individual annual distributions for five years or until he or she turns 59.5, whichever comes last. |||Because the IRS requires individuals to continue the SEPP program for a minimum of five years, this is not a solution for those who seek penalty-free short-term access to retirement funds. If you cancel the plan before the minimum holding period expires, you will be required to pay the IRS all the penalties that were waived on amounts taken under the program, plus interest. SEPP programs are not permitted under employee-sponsored qualified plans, such as 401(k) plans.
Insurance that is purchased with the intent of eventually transferring ownership to a third party, usually investors. Stranger-owned life insurance (STOLI) is generally described as the purchase and subsequent sale of a newly issued life insurance policy to an investor or group of investors who have no insurable interest in the person being insured. In other words, the policy enables investors to profit from the death of the insured. Watch: How Much Life Insurance Do you need? |||There are a couple of ways investors attempt to profit from stranger-owned life insurance. In most instances, the investors can wait for the insured to die and simply collect the payout. Or, if the group of investors is large enough and they have invested in several life insurance contracts, these can be bundled and traded or sold to other investors who are looking to invest in similar investments. Insurance companies argue that such policies are manufactured and overstate insurable interest at best. Many of the more obvious STOLI loopholes have been closed and insurers themselves are becoming more vigilant.
The official interbank offer rate for short term loans in Sweden. The Stockholm Interbank Offer Rate is determined by the Riksbank, Sweden's central bank, and is often used for one or three month terms. STIBOR is the interest rate banks are charged when borrowing from other banks for maturities longer than overnight. |||STIBOR is used in Sweden similar to how LIBOR is used in the United States and United Kingdom. It serves as a benchmark for many floating interest rate instruments. The rate is to be used for short term loans, which are less than one year in a maturity.
A monetary policy program used by the Federal Reserve to help increase liquidity in the U.S. credit markets. TAF allows the Federal Reserve to auction set amounts of collateral-backed short-term loans to depository institutions that are judged to be in sound financial condition by their local reserve banks. Participants bid through the reserve banks, with a minimum bid set at an overnight indexed swap rate relating to the maturity of the loans. These auctions allow financial institutions to borrow funds at a rate that is below the discount rate. |||The TAF was first used by the Fed on December 17, 2007, in response to the 2007 subprime crisis, which caused liquidity problems in the market. After the Fed's attempt to spur liquidity by decreasing its discount rate failed to achieve the desired result, the Fed teamed up with other central banks around the world to create this monetary policy instrument in an attempt to prevent the situation from growing worse.
When a property is owned by two or more tenants. If one owner dies, the other does not automatically take the entire estate. |||When the person dies, the property portion is transferred to the descendant's beneficiary.
An active management portfolio strategy that rebalances the percentage of assets held in various categories in order to take advantage of market pricing anomalies or strong market sectors. |||This strategy allows portfolio managers to create extra value by taking advantage of certain situations in the marketplace. It is as a moderately active strategy since managers return to the portfolio's original strategic asset mix when desired short-term profits are achieved.
When a property is owned by two or more tenants. If one owner dies, the survivor takes the whole estate. |||This agreement can only be changed if each person is still living.
A service offered by a mutual fund that provides a specific payout amount to the shareholder at predetermined intervals, generally monthly, quarterly, semiannually or annually. |||Three main reasons for using SWPs are to meet living requirements (usually when retired), for tax planning purposes, or to comply with mandatory retirement plan withdrawal rules after reaching age 70.5.