Gen Terms and Definitions Flashcards
UTI
Unit Investment Trust
which is an unmanaged portfolio of securities, most typically
municipal bonds.
MAGI
Modified Adjusted Gross Income
gross income - certain deductions
MAGI may be used to determine eligibility for certain tax benefits.
HO-15
an endorsement added to a Homeowner’s insurance policy for open perils coverage on the
insured’s personal property.
It is typically combined with HO-3 coverage.
OASDI
Old Age, Survivors and Disability insurance tax.
It is that portion of FICA tax that
does not address Medicare. It is imposed on earned income up to the “taxable wage base.”
JTWROS
Joint Tenants with Rights of Survivorship
It is an arrangement under which two or
more adults own equal interests in an asset for legal, estate planning, and tax purposes.
FOMC
Federal Reserve Board’s (FRB) Federal Open Market Committee.
The FOMC influences the U.S. Money Supply by alternately infusing the domestic banking system with cash or securities.
FOMC has a strong influence on short-term interest rates and on unemployment rates.
AOTC
American Opportunity Tax Credit.
It is a credit against income tax due for up to $2,500 per student, per year relating to amounts paid for undergraduate college tuition and fees.
RSU
Restricted Stock Unit.
This executive perk generally based on performance and years of service grants stock. Presuming the granting employer stays afloat, (unlike rights–which may expire worthless) the RSUs will have some amount of value.
NAV
Net Asset Value.
It is the per-share value of a mutual fund net of certain expenses.
Mutual fund shares are generally redeemed at NAV. Certain “no-load” mutual funds may also be
purchased at NAV.
YRT
Yearly Renewable Term (life insurance).
For individuals, renewability is provided
without new underwriting but generally the premium rises along with the insured’s age.
Group life insurance plans often feature YRT.
Z - Tranches
represents the riskiest level that an investor in a Collateralized Mortgage Obligation (CMO) can
assume. It carries no holding period interest and is the last selection to receive payout.
EFC
Expected Family Contribution, namely the amount of money that a student and family would need to contribute to college costs before financial aid becomes available.
BPS
basis points. One hundred basis points represent one full percent. BPS mean one one
hundredth of one percent
QBI
qualified business income meaning income distributed to an owner or investor from a
pass-through entity such as an LLC, S Corp, REIT or other pass through.
A below-the line deduction of up
to 20% of QBI may be available.
TIC
tenants (or tenancy) in common.
It is a form of property ownership that permits
unequal amounts of interest among tenants.
XD
Ex-dividend meaning that the stock trade will not be eligible for distribution of the
current dividend.
SEP
Simplified Employee Pension.
A SEP is an IRA arrangement entirely funded by an employer or the self-employed. It permits larger contributions than those for non-employer- funded IRAs.
PV
Present Value meaning the amount of money with which an investment or savings scenario begins.
Present value may present a prior starting amount or a current starting amount.
Reg D
represents a body of Securities and Exchange rules that apply to new issues of private
placement securities.
Reg D requires disclosure and limits the number of non-accredited investors.
CMO
Collateralized Mortgage Obligation (CMO)
which means a substantial pool of mortgage –
backed securities created by a brokerage firm. An investor buys a particular “tranche” each of which
presents a unique risk level.
IRR
Internal Rate of Return.
It represents the percentage return on an investment taking into account all uneven cash flows.
VUL
Variable Universal Life (insurance).
A VUL policy provides for flexible premiums and a death benefit the amount of which will ultimately depend on the performance of the separate account.
GNMA
Goverment National Mortgatge Association (GNMA)
buys mortgagtes and places them into pools
GNMA securities are pass through and include interest & principal
Are direct guarantee of the US government, but NOT issued by the Treasury.
GNMA interest is taxable at fed/state and local levels
amount received each month can vary and realized yeild ont he bond can be somehwat variable due to underlying mortgage principal payments being impacted by interest rate changes.
Balloon Mortage
mortgage in which a initial payments are lower and payments get larger as the time goes on.
best if for shot-term/temporary housing scenarios
large portion of the borrowed principal is repaid in a single payment at the end of the loan period
Coverdell ESA
A savings account is set up to pay the qualified education expenses of a designated beneficiary.
EFC
Expected Family Contribution
is the amount of money your family will be expected to contribute to your education
529 ABLE
a tax-favored savings account that can accept contributions for an eligible individual with a disability or who is blind (blindness or disability occurred before age 26)
The disabled person must be the designated beneficiary and owner of the account.
ONLY ONE 529 ABLE Account per disable bene
FAFSA
Free Application for Federal Student Aid
Used to determine eligibility for Federal Financial Aid
2-Year lookback for reported income.
Pell Grants
Awarded to undergraduate students who have exceptional financial need and who have not earned a bachelor’s, graduate, or professional degree.
FSEOG
Federal Supplemental Educational Opportunity Grant
A FSEOG is for undergraduates with exceptional financial needs (i.e., students with the lowest EFCs) and gives priority to students who receive Federal Pell Grants.
An FSEOG does not have to be paid back.
Direct Subsidized Loans
Federal loans; need-based; undergrad ONLY
have slightly better terms to help students with financial needs.
The U.S. Department of Education pays the interest on a Direct Subsidized Loan
while you’re in school at least half-time
for the first six months after you leave school (referred to as a grace period) during a period of deferment (a postponement of loan payments).
Direct Unsubsidized Loans
non-need-based;
undergrad, grad, & professional student
Students are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
Direct PLUS Loan
non-need-based;
undergrad, grad, & professional student
Work-study Programs
Work-study is funded by federal, state, and/or institutional allocations.
Employers must match the federal and state monies.
A school’s office of financial aid administers work-study programs.
Defined Contribution (DC) Plan
a type of qualified plan in which the sponsor defines the contribution formula rather than guaranteeing a final benefit.
Types of DC Profit Sharing Plans
- Traditional Profit-Sharing
- Section 401(k) Plan
- Stock Bonus Plan
- ESOP
DC profit-sharing plans promise “substantial and recurring” employer contributions (Annual contributions are not required)
Types of DC Pension Plans
DC pensions require mandatory employer contributions
1. Money Purchase Pension Plan
2. Target Benefit Pension Plan
