An annuity payment from a qualified plan or 403(b) account that provides a life annuity to the participant and a survivor annuity for the spouse after the participant’s death. QJSA rules apply to money-purchase pension plans, defined-benefit plans and target benefits. They can also apply to profit-sharing and 401(k) plans, but only if so elected under the plan. The plan document usually provides the annuity percentage, but the general requirement is that the survivor annuity must be 50-100% of the annuity paid to the participant. If the participant is unmarried, the annuity is over his or her life expectancy.Participants can waive the QJSA payment and receive lump-sum or ad-hoc distributions instead, provided the participant's spouse consents to the waiver and the spousal waiver is witnessed by a plan representative or notary public.
Distributions made from a Roth IRA that are tax and penalty free. In order to be a qualified distribution, the following two requirements must be met: 1) It must occur at least five years after the Roth IRA owner established and funded his/her first Roth IRA2) At least one of the following requirements must be met: a) The Roth IRA holder must be at least age 59.5 when the distribution occurs. b) Distributed assets limited to $10,000 are used towards the purchase or rebuilding of a first home for the Roth IRA holder or a qualified family member. c) The distribution occurs after the Roth IRA holder becomes disabled. d) The assets are distributed to the beneficiary of the Roth IRA holder after his/her death. Distributions that do not meet the above criteria are considered non-qualified and may be subject to income tax and early distribution penalties.
The process of realigning the weightings of one's portfolio of assets. Rebalancing involves periodically buying or selling assets in your portfolio to maintain your original desired level of asset allocation. For example, say your original target asset allocation was 50% stocks and 50% bonds. If your stocks performed well during the period, it could have increased the stock weighting of your portfolio to 70%. You may then decide to sell some of your stocks and buy bonds to get it back to your original target allocation of 50/50.
A trust created for the purpose of supporting the non-qualified benefit obligations of employers to their employees. These trusts are sometimes referred to as "grantor trusts". Called a Rabbi trust due to the first initial ruling made by the IRS on behalf of a synagogue, these forms of trusts create security for employees because the assets within the trust are typically outside the control of the employers and are irrevocable.
A highly subjective measure of happiness that is an important component of many financial decisions. Factors that play a role in quality of life vary according to personal preferences, but they often include financial security, job satisfaction, family life, health and safety. Financial decisions usually involve a tradeoff where quality of life is decreased in order to save money or, conversely, quality of life is increased by spending more money. Commuting to work provides a good example. It is possible to save money on housing by living further away from popular job centers and commuting to work. However, commuters don’t have as much time to spend with family or on hobbies because of the extra time spent sitting in traffic. Some people consider this tradeoff worthwhile, while others choose to maximize their quality of life by spending more money to live closer to work. Quality of life is also an issue when developing a personal savings plan. In this case, the tradeoff involves a sacrifice of current quality of life in order to improve future quality of life.
This type of annuity is similar to any other, except that it has been approved by the IRS for use within a Qualfied Retirement Plan or IRA. Qualifying Annuties can be either fixed, indexed or variable, depending upon the investment objectives of the plan sponsor. Contributions made into a Qualifying Annuity are tax-deductible according to ERISA guidelines, unless the plan or annuity has a Roth feature. Qualifying Annuities are not tax-deductible plans in and of themselves; they must reside within a Qualified Plan or IRA in order to enjoy this status. Qualifying Annuities can be either the sole vehicle inside the plan or account, or they can be one of several other choices that are offered as well. In many cases, the Qualifying Annuity is a variable contract and is the only vehicle offered within the plan, with the variable subaccounts constituting the choices available to plan participants.
A plan that meets requirements of the Internal Revenue Code and as a result, is eligible to receive certain tax benefits. These plans must be for the exclusive benefit of employees or their beneficiaries. There are two kinds of qualified plans: defined-benefit plans and defined-contribution plans. Some examples of defined-contribution plans are 401(k) plans, money-purchase pension plan and profit-sharing plans.
A method used by individuals to minimize the tax burden of converting an IRA by recharacterizing Roth IRA-converted amounts back to a Traditional IRA and then converting these assets back to a Roth IRA again. Be aware that the IRS released regulations in 1999 placing limits on reconversions. Investors who want to reconvert to a Roth IRA must wait until the beginning of the new tax year following the tax year they recharacterized or a minimum of 30 days after the recharacterization is completed, whichever is later. For example, if you recharacterized a conversion contribution on December 15, 209, you would not be able to reconvert until January 15, 2010. If you reconvert prior to these limits, the reconversion will be deemed a failed conversion by the IRS, and if not corrected may result in an excess contribution to the Roth IRA.
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