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$ Chapter 3 Vocab
$ Chapter 3 Wealth Building & College Savings Vocabulary
Question | Answer |
---|---|
defined contribution plan offered by a corporation to its employees, which allows employees to set aside tax-deferred income for retirement purposes; in some cases, employer will match their contributions | 401(k) |
after-tax college fund that grows tax-free for educational uses; elegibility based on parent's annual income | Educational Savings Account (ESA) |
tax-deferred arrangement for individuals with earned income and their non-income-producing spouses; growth is not taxed until money is withdrawn; contributions to an IRA are often tax-deductible | Individual retirement Arrangement (IRA) |
a type of retirement plan where you put money in before taxes have been taken out, but must pay taxes on the money at the time of withdrawl | Pre-Tax Retirement Plan |
movement of funds from a tax-deferred retirement plan from one qualified plan or custodian to another; incurs no immediate tax liabilities or pemalties, but requires IRS reporting | Rollover |
retirement account funded with after-tax dolors that subsequently grows tax free | Roth IRA |
Money that is working for you, either tax-deferred or tax-free, within a retirement plan. | Tax-Favored Dollars |