401(k) is a type of savings account in the United States, which takes
its name from the section in the Internal Revenue Code, 26 U.S.C. §
Employers can help their employee save for retirement while reducing
taxable income under this provision, and workers can choose to deposit
part of their earnings into a 401(k) account and not pay income tax on
it until the money is later withdrawn in retirement. Interest earned
on money in a 401(k) account is never taxed before funds are
Employers may choose to, and often do, match contributions that
workers make. The 401(k) account is typically administered by the
employer, while in the usual "participant-directed" plan, the employee
may select from different kinds of investment options.
Employees choose where their savings will be invested, usually,
between a selection of mutual funds that emphasize stocks, bonds,
money market investments, or some mix of the above.
Many companies' 401(k) plans also offer the option to purchase the
company's stock. The employee can generally re-allocate money among
these investment choices at any time. In the less common
trustee-directed 401(k) plans, the employer appoints trustees who
decide how the plan's assets will be invested.
Since 2006, another type of 401(k) plan is available. Participants in
401(k) plans that have the proper amendments can allocate some or all
of their contributions to a separately-designated Roth account,
commonly known as a Roth 401(k).
These "Roth" contributions will be collected and treated as after-tax
dollars; that is, income tax is paid or withheld in the year
contributed. Qualified distributions from a designated Roth 401(k)
account, including all income, are tax-free. (A traditional 401(k)
account is funded with pre-tax dollars and, in general, tax must be
paid when the original contribution and earnings are withdrawn.)
All employer matching funds are deposited into the account on a pretax
basis, even if the employee's contributions are all Roth
contributions. Employer contributions may be subject to vesting rules
set by the plan documents requiring the employee to reach a certain
number of years of service before they are entitled to keep the
For non-profit organizations the corresponding plan is found in 26
U.S.C. § 403(b) and for government entities it is 26 U.S.C. § 457,
although older plans were established under 457(g).
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We have complied a simple to understand credit card glossary. In simple words, it is card which
can be used to obtain cash, goods or services up to a stipulated credit limit. The glossary
covers some of the most commonly used credit card terms.
Lets begin with the most basic "account number". It refers to a unique number that is assigned
to every credit card. Next in the credit card terms come "annual fees". Some of the credit card
holders are charged annually for holding the card. This is known as annual fees. Another credit
card term that would be used frequently is "APR". It is the rate at which card companies charge
you every year for your account.
No credit card terms dictionary is complete without the term "balance transfer". It simply means moving your credit balance from one credit account to another. It helps in saving your interest payments. A credit card term that most people are afraid to come across in credit card terms is "bad credit". It means poor or bad credit rating. It can be caused by late payments, exceeding card limits etc.
In credit card terms, the next word would be, "cash advance". Cash advance means a loan taken
through your credit card, using an ATM. Then in credit card glossary comes "credit report". It
is a record of your credit history that is usually consulted by lenders in order to decide whether they should lend you money or not, and how much.
In credit card terms, you will also find the term "debit card". Debit card allows you to spend
money on the balance available in your account - usually from a current or savings account.
Next in our list of credit card terms is "grace period". It is the time period between the transaction date and billing date when the payment can be made without incurring any interest rate.
If you are going through a money crunch then this credit card term is essential for you to
understand – the "minimum payment". Minimum payment is the smallest payment that you can pay to keep your account in good standing.
Another very important credit card term to understand is "PIN number". It is the security code
that you need for authorization while making money transaction through your credit card.
Next credit card term is "pre approved". This means a customer who has already passed the
initial credit bureau evaluation.
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