DSB New Hire Training Vocab 1

Question 1

403(b)

Answer 1

A 403(b) plan is a retirement account for certain employees of tax-exempt organizations such as schools and hospitals. Similar to 401(k) but investment options are usually more limited. Also called a voluntary tax-deferred annuity (TDA).

Question 2

457(b)

Answer 2

A 457(b) is usually for state and local government employees. It allows investing a portion of your salary on a pretax basis. The money grows, tax-deferred. Savings can be rolled over like a 401(k). Rules are different if not a government employee.

Question 3

Additional Tax Withholding

Answer 3

When a participant requests more money be withheld for taxes than the standard federal amount for that transaction.

Question 4

After-tax contributions

Answer 4

Money put into a retirement account after the employee has paid income taxes on that money.

Question 5

Annuitant

Answer 5

An individual who is entitled to collect the regular payments of a pension or an annuity investment. The annuitant may be the contract holder or another person, such as a surviving spouse. Similar to the insured on an insurance policy.

Question 6

Combo Plan

Answer 6

Plan sponsors can offer more than one type of plan. For example, a non-profit group can offer a 401(k) and a 457(b). Plan sponsors with more than one type of plan are combo plans. (Omni field PM722)

Question 7

DocuSign

Answer 7

An e-signature or electronic signature is a legal way to get consent or approval on electronic documents or forms. It can replace a handwritten signature in virtually any process. DocuSign is the brand name of an e-signature provider.

Question 8

401(k)

Answer 8

Named after a section of the Internal Revenue Code, 401(k)s are employer-sponsored, defined-contribution plans (DC) that give workers a tax-advantaged way to save for retirement.

Question 9

Defined Contribution Plan

Answer 9

A defined-contribution (DC) plan is a retirement plan that’s typically tax-deferred, like a 401(k) or a 403(b), in which employees contribute a fixed amount or a percentage of their paychecks to an account that is intended to fund their retirements.

Question 10

Defined Benefit Plan

Answer 10

A defined-benefit (DB) plan is an employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history.

Question 11

ERISA (Employee Retirement Income Security Act)

Answer 11

Federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

Question 12

Form 1099

Answer 12

Used by taxpayers to provide information to the Internal Revenue Service (IRS) about all of the different types of income they received throughout the year outside of their regular salary. (Omni field PM706). We may or may not provide this form to participants.

Question 13

Full Service

Answer 13

OneAmerica manages most of the recordkeeping activity for the plan such as regulatory compliance testing, tax reporting, and disbursements.

Question 14

IRA (Individual Retirement Account)

Answer 14

A tax-advantaged account is usually set up by individuals to save and invest for retirement. Deposits are generally made with wages or earnings that have not been taxed. Savings in an IRA are taxed upon withdrawal

Question 15

Lump Sum

Answer 15

A one-time cash payout of an amount of money that could be subject to state and federal taxes.

Question 16

OneForm/OneSign agreement

Answer 16

An agreement with the plan sponsor authorizing OneAmerica to process certain items such as mandatory cashouts, hardship distributions, and separations from service without an authorized plan sponsor’s signature as long as we have all applicable documentation.

Question 17

Qualified Plan

Answer 17

A qualified retirement plan meets the requirements of Internal Revenue Code Section 401(a) of the Internal Revenue Service (IRS) and is thus eligible to receive certain tax benefits, unlike a non-qualified plan

Question 18

Rollover

Answer 18

A rollover may entail a number of actions, most popularly the transfer of the holdings of one retirement plan to another without creating a taxable event.

Question 19

Roth IRA

Answer 19

A Roth IRA is a type of individual retirement account (IRA) funded with wages and earnings that have already been taxed. This allows qualified withdrawals on a tax-free basis provided certain conditions are satisfied. This includes other IRAs including Self-directed, SIMPLE, and SEP. If the Omni field PM702 contains a G,H,I,J, or K the plan is a type of Roth IRA. (Omni fields PH800, PH801 also indicate a Roth plan). These plans are processed as a 444 not a 404.

Question 20

Tax Deferred Annuity

Answer 20

A contract with an insurance company that promises to pay the owner a regular income, or a lump sum, at some future date. Deferred annuities differ from immediate annuities, which begin making payments right away.

Question 21

Top Hat Plan

Answer 21

Top-hat plans are unfunded plans maintained by a for-profit or nonprofit employer primarily to provide deferred compensation for management or highly compensated employees. Top-hat plans are exempt from the participation, funding, vesting, accrual and fiduciary provisions of ERISA and are subject to a few other requirements, such as reporting and disclosure rules.

Question 22

Transfer (Internal and External)

Answer 22

An internal intra-plan transfer or exchange is a non-taxable movement of assets without a distributable event.

Question 23

Vesting

Answer 23

When an employee accrues nonforfeitable rights over employer-provided contributions made to the employee’s qualified retirement plan account or pension plan.

Question 24

Profit Sharing Plan

Answer 24

A profit-sharing plan gives employees a share in their company’s profits based on its quarterly or annual earnings. It is up to the company to decide how much of its profits it wishes to share. Contributions to a profit-sharing plan are made by the company only; employees cannot make them, too.

Question 25

Separation from Service (T404)

Answer 25

A separation from service is when a participant is no longer employed by the plan sponsor.

Question 26

In-Service Withdrawal (T444)

Answer 26

Any withdrawal of funds from a qualified retirement plan while a participant is employed by the plan sponsor.

Question 27

Participant Financial Support

Answer 27

A service level of P in PM687. We do not track vesting for PFRK plans, and we may or may not provide 1099 service.

Question 28

Participant Financial Record Keeping (PFRK)

Answer 28

PFRK is a service level for an OA plan. It means that OA provides only recordkeeping services and does not provide 1099 service.

Question 29

Investment Only

Answer 29

A service level formerly offered by OA. Investment-only plans were similar to PFRK plans. but didn’t have a third-party agreement (TPA). The investment-only service level is no longer offered by OA, and there should not be any new investment-only plans.

Question 30

Vesting Schedule

Answer 30

The vesting schedule determines the amount of money available for withdrawal after a specific period of time working for the plan sponsor.