Monday, November 30, 2015

DAVE RAMSEY ON EXPLANATIONS OF WEALTH BULDING PRODUCTS

401k

defined contribution plan offered by a corporation to its employees, which allows employees to set aside tax-deferred income for retirement purposes

403B

retirement plan similar to a 401 k plan, but one that is offered by non-profit organizations, such as hospitals, schools, and some charitable organizations, rather than corporations

457 plan

non-qualified, deferred compensation plan established by state and local governments for tax-exempt government agencies and tax exempt government agencies and tax exempt employees

529 plan

college savings plan that allows individuals to save on a tax-deferred basis in order to fund future college and graduation school expenses or a child or beneficiary

Custodian

one who is responsible for an account listed in someone else's name

Direct Transfer

movement of tax-deferred retirement plan money from one qualified plan or custodian to another

ESA

after tax college fund that grows tax-free for educational uses; eligibility based on parents' annual income

IRA

tax-deferred arrangement for individuals with earned income and their non-income producing spouses; growth is not taxed until money is withdrawn

Pre-Paid Tuition

paying for college ahead of tie by accumulating units of tuition

Rollover

movement of funds from a tax-deferred retirement plan from one qualified plan or custodian to another

Roth IRA

retirement account funded with after-tax dollars that subsequently grows tax free

SEPP

pension plan in which both the employee and the employer contribute to an individual retirement account

Tax-Favored Dollars

money that is working for you, either tax-deferred or tax free, within a retirement plan

UGMA

legislation that provides a tax-effective manner of transferring property to minors without the complications of trusts or guardianship restrictions

UTMA

law similar to the Uniform Gifts to Minors Act that extends the definition of gifts to include real estate, paintings, royalties, and patents.

DAVE RAMSEY, AUTHOR

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