Terms

Question 1

TERM: Employer-sponsored plan

Answer 1

A retirement plan set up and overseen by an employer for the benefit of its employees.

Question 2

TERM: ERISA

Answer 2

The Employee Reitrement Income Security Act, a law passed in 1974, covering employee benefit plans. It provides protection to participants of retirement plans.

Question 3

TERM: Plan Sponsor

Answer 3

The designated party (usually an employer or company) that establishes and maintains the plan for the benefit of the company’s employees

Question 4

TERM: Qualified Plan

Answer 4

A retirement plan that meets the requirements of IRC 401(a) and, therefore, provides special tax advantages to the plan sponsor, the trust, and plan participants.

Question 5

TERM: Third-Party Administrator (TPA)

Answer 5

A TPA is a company that specializes in qualified plan administration. TPA services can be bundled with a 401(k) recordkeeper or payroll company, or hired in a strictly third-party capacity (for preparation of annual IRS testing and Form 5500 only). Their main job is to ensure the 401(k) plan follows the regulations contained in the Employee Retirement Income Security Act of 1974 (widely known as ERISA).

Question 6

TERM: Social Security

Answer 6

The commonly used term for the federal Old-Age, Survivors, and Disability Insurance (OASDI) program and is administered by the Social Security Administration (SSA). The Social Security Act was passed in 1935, and the existing version of the Act, as amended, encompasses several social welfare and social insurance programs, including retirement benefits