Docstoc

glossary

Document Sample
glossary Powered By Docstoc
					                                         GLOSSARY

                 TERM                                    DEFINITION

1. Benefit Formula                The provision in the qualified defined benefit plan which
                                  describes the annual benefit a participant will receive at
                                  retirement (e.g., 2% of the final 3-year average
                                  compensation per year of service)
2. Eligible 457(b) Plan           A deferred compensation plan that is maintained by an
                                  eligible employer – a state or local government or a
                                  nonchurch, nongovernmental tax-exempt organization-
                                  and that also meets statutory requirements.
3. Employer-paid Life Insurance   Insurance policy on the life of the employee with benefits
   Benefit                        equal to a fixed or variable dollar amount (e.g., a face
                                  value of $50,000) or a percent of compensation (e.g., 2
                                  times compensation).
4. Employer-paid Long-term
   Disability Insurance Benefit   An arrangement paid for by the employer which provides
                                  income-replacement benefits to employees who are
                                  unable to work because of illness or accident, usually
                                  following a short-term disability period (e.g., 90 days,
                                  180 days, etc).. The level of benefits generally is
                                  dependent on the employee’s pre-disability income level,
                                  not the nature or extent of his or her disability.
5. 401(a)(17) Limit               The maximum amount of annual compensation that can
                                  be used in calculating most tax favored retirement plan
                                  benefits (e.g., generally, $170,000 for private sector
                                  plans).
6.   401(k) Plan                  A defined contribution plan established by a taxable or
                                  non-taxable organization (or a grandfathered government
                                  401(k) plan) under Section 401(a) of the Internal Revenue
                                  Code which provides that the participants may contribute
                                  pre-tax salary deferrals to their accounts (e.g., participants
                                  may defer up to 10% of their salaries and the employer
                                  matches $1 for $1 the first 5%).




William M. Mercer, Incorporated          1              University of California Schools of Health Sciences
                                                                     Physician Retirement Benefits Survey
                 TERM                                    DEFINITION

7. 403(b) Plan                    A defined contribution plan established by a section
                                  501(c)(3) organization or public educational organization
                                  under Section 403(b) of the Internal Revenue Code which
                                  permits salary reduction contributions and may permit
                                  employer matching and/or non-matching contributions
                                  (also referred to as a “TSA Plan” or “Tax Sheltered
                                  Annuity Plan”).
8. 415 Limit                      In the case of a qualified defined contribution plan or
                                  403(b) plan, annual contributions plus any other annual
                                  additions are limited to the lesser of $30,000 or 25% of a
                                  participant’s compensation.
                                  In the case of a qualified defined benefit plan, benefits are
                                  limited to the lesser of $135,000 or 100% of the
                                  participant’s average compensation for the participant’s
                                  highest three years (but, if a government plan, only
                                  limited to $135,000)
9. Ineligible 457(f) Plan         A non-qualified plan offered by tax-exempt organizations
                                  and government employers used to provide retirement
                                  benefits and compensation-deferral opportunities to
                                  certain employees, but requires a substantial risk of
                                  forfeiture to avoid current taxation (i.e., generally, the
                                  employee must keep working to receive the benefits).
10. Make-up Plan for the          An additional retirement plan designed to replace any
    401(a)(17) Limit              benefits lost as a result of the prohibition against the
                                  qualified defined benefit plan and/or defined contribution
                                  plan considering compensation in excess of the
                                  401(a)(17) limit (e.g., participant has compensation of
                                  $200,000; since only $170,000 is considered in the
                                  qualified plan, the make-up plan replaces benefits she
                                  would have earned if total compensation of $200,000 had
                                  been used in the qualified plan)




William M. Mercer, Incorporated          2             University of California Schools of Health Sciences
                                                                    Physician Retirement Benefits Survey
                 TERM                                    DEFINITION

11. Make-up Plan for the 415      An additional retirement plan designed to replace any
    Limit                         benefits lost as a result of the prohibition against the
                                  qualified defined benefit plan and/or defined contribution
                                  plan providing benefits in excess of the 415 limit (e.g., in
                                  a qualified defined benefit plan, a participant is limited to
                                  annual benefits of $135,000, but the formula would
                                  otherwise produce a benefit of $150,000; the make-up
                                  plan would replace the benefit lost as a result of the 415
                                  limit.).
12. Matching Feature              An employer contribution to a qualified defined
                                  contribution plan or other tax favored defined
                                  contribution retirement plan which matches some portion
                                  of contributions made by participants (e.g., the employer
                                  matches $1 for $1 of the first 5% of compensation an
                                  employee contributes to the 403(b) plan).
13. Money Purchase Pension Plan   A defined contribution plan established under Section
                                  401(a) of the Internal Revenue Code which provides that
                                  the employer has a fixed obligation to make certain
                                  contributions to the plan each year (e.g., employer agrees
                                  to contribute an amount to each participant’s account
                                  equal to 5% of the participant’s compensation each year.).
14. Other Deferred Compensation   A plan which is something other than a Tax Favored
    Plans                         Defined Contribution Retirement Plan or a Tax Favored
                                  Defined Contribution Savings Retirement Plan such as a
                                  supplemental executive compensation plan, ineligible
                                  457(f) plan, or some other plan designed to defer an
                                  employee’s compensation.
15. Pension Spiking               Significant increases in final years’ compensation which
                                  would significantly increase benefits for all years of
                                  service under a qualified defined benefit plan.
16. Portion of W-2 Earnings       An amount less than all taxable income (e.g., base salary,
                                  excluding bonuses and incentive pay).




William M. Mercer, Incorporated          3              University of California Schools of Health Sciences
                                                                     Physician Retirement Benefits Survey
                 TERM                                     DEFINITION

17. Profit Sharing Plan             A defined contribution plan established under Section
                                    401(a) of the Internal Revenue Code which provides that
                                    the employer will or may make contributions and which
                                    has a predetermined formula for allocating contributions
                                    among the participants (e.g., employer agrees that it will
                                    make discretionary contributions to the plan and if made
                                    the contributions will be allocated among all participants
                                    based on a percentage of compensation).
18. Summary Plan Description        A booklet provided to plan participants describing
                                    benefits, rights and plan provisions.
19. Supplemental Executive          Any non-qualified plan used to provide retirement
    Compensation Plan (SERP)        benefits and compensation-deferral opportunities to
                                    certain employees (e.g., make-up plan; 457(f) plan;
                                    nonqualified plan with benefits not dependent on
                                    qualified retirement plan formula; etc.).
20. Tax Favored Defined             A plan established under Section 401(a), 403(b) or 457(b)
    Contribution Retirement Plan    of the Internal Revenue Code that provides for employer
                                    contributions each year to each participant’s account.
                                    (e.g., a plan promises that the employer will contribute
                                    3% of compensation each year). Also, this plan may
                                    include employee contributions.
21. Tax Favored Defined             A 403(b), 401(k), eligible 457(b) plan, or some other
    Contribution Savings            defined contribution plan entitling participants to make
    Retirement Plan                 pre-tax salary deferrals. This plan permits only employee
                                    contributions.
22. Tax Qualified Defined Benefit   A plan established under Section 401(a) of the Internal
    Retirement Plan                 Revenue Code and designed to pay a certain benefit at
                                    retirement (e.g., a plan promises to pay 2% of a
                                    participant’s final compensation for each year of service).
23. W-2 Earnings                    All earnings reported as taxable income (e.g., would
                                    include bonuses and incentive pay).




William M. Mercer, Incorporated           4              University of California Schools of Health Sciences
                                                                      Physician Retirement Benefits Survey

				
DOCUMENT INFO