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Glossary

Full List

280G


Code section which governs certain payments to executives because of a change in control of the company.




3(21) Fiduciary


An individual who provides investment advice for a fee. Under this type of arrangement, the plan sponsor retains the ultimate decision-making authority for the plan’s investments and may accept or reject any recommendations. Both the plan sponsor and the 3(21) fiduciary share the fiduciary responsibility.




3(38) Fiduciary


Any fiduciary (other than a trustee or named fiduciary), who has the power to manage, acquire, or dispose of any asset of a plan; who (1) is registered as an investment adviser under the Investment Advisers Act of 1940 with the SEC, or with a State, (2) is a bank; or (3) is an insurance company qualified to perform services and (4) has acknowledged in writing that he is a fiduciary with respect to the plan. Under such an arrangement, the plan sponsor is relieved of all fiduciary responsibility for the investment decisions made by the investment professional.




402(g) Deferral Limit


Code Section that limits the amount of elective deferrals which can be made by an individual in a calendar year.




401(k) Plan


A retirement plan which permits employees to make pre-tax salary deferrals and to which employers may make matching and/or non-elective contributions. Sometimes called a “cash or deferred arrangement”" or “CODA.”




403(b) Plan


A retirement plan (like a 401(k) plan) for certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers.




404(c) Plan


A plan which permits participants to direct the investment of the assets in their plan accounts, and which meets certain requirements under Code §404(c) that relieve plan fiduciaries of some liability for investment decisions.




409A


Code section which regulates nonqualified deferred compensation.




415 Limit


Code Section that limits the amount of Annual Additions which can be made for individual participants in a plan year.




457(b) Plan


Non-qualified, unfunded deferred compensation plan available for certain state and local governments and tax exempt entities.




457(f) Plan


Non-qualified, unfunded deferred compensation plans available for certain state and local governments and tax exempt entities.




ACA


The Affordable Care Act, officially known as the Patient Protection and Affordable Care Act, and commonly known as Obamacare, a comprehensive health care reform law effective in 2010.




ACP Test


Actual Contribution Percentage Test, which is a nondiscrimination test which compares the amount of Annual Additions received by HCEs and non-HCEs under a 401(k) or 403(b) plan.




AD&D


Accidental death & dismemberment insurance.




Adoption Agreement


The part of a pre-approved retirement plan document which provides for the optional provisions available under the document, and which is executed by the plan sponsor and participating employers when adopting the document.




ADP


Actual Deferral Percentage Test, which is a nondiscrimination test which compares the amount of deferrals made by HCEs and non-HCEs under a 401(k) plan.




Advisor


An outside person or entity who provides guidance and advice on managing the plan.




Alternate Payee


An individual who is entitled by a court order (a QDRO) to an interest in the account of a plan participant, generally a former spouse.




Amendment


A written change to plan terms which has been adopted by the plan sponsor. May be discretionary or required by law.




Annual Additions


Annual contributions to all of a participant’s accounts in plans maintained by one employer (and any related employer). These include:

  • Elective Deferrals (but not catch-up contributions)
  • Matching Contributions
  • Non-Elective Contributions
  • Allocations of Forfeitures




Audit CAP


The Audit Closing Agreement Program, under EPCRS, which is the program under which plan failures discovered during an IRS audit are corrected and sanctions are assessed.




Automatic Enrollment, Automatic Deferral


A plan feature that allows an employer to automatically deduct elective deferrals from an employee’s wages unless the employee makes an election not to contribute or to contribute a different amount.




Automatic Escalation


A plan feature that allows an employer to automatically increase in an annual basis, the amount of elective deferrals from an employee’s wages unless the employee makes an election not to contribute or to contribute a different amount.




Base Plan Document, BPD


The part of a pre-approved retirement plan document which provides for the non-optional, boilerplate provisions under the document.




Beneficiary


An individual or entity who is entitled, under the terms of the plan, to all or a portion of a participant’s account if the participant dies.




Cafeteria Plan, Flex Plan, 125 Plan


A plan which is tax-qualified under Code §125, providing a choice between cash or one or more permitted benefits, such as health insurance, flexible spending accounts, disability insurance, life insurance, etc.




COBRA


The Consolidated Omnibus Budget Reconciliation Act of 1986, which provides for the continuation of group health plan coverage upon the occurrence of certain events which would otherwise result in a loss of coverage.




Committee


A plan’s administrative committee, which may be established by a plan sponsor and delegated some or all duties and powers of the plan administrator.




Code


The Internal Revenue Code.




Compensation


A participant’s pay that is considered under the plan, as defined under the terms of the plan document.




Custodian


A plan service provider, typically a bank or other financial institution that holds plan assets.




Default Beneficiary


A Beneficiary determined under the terms of the plan where there is no Designated Beneficiary.




Defined Benefit Plan


A retirement plan which provides for a specified benefit be paid from the plan on retirement, such as a pension plan.




Defined Contribution Plan


A retirement plan which provides for a specified contribution or contributions to the plan, such as a profit-sharing plan, 401(k) plan, or money purchase pension plan.




Dependent Care FSA, DCAP


A dependent care flexible spending account, which is an arrangement under a Cafeteria Plan, through which an employee may reduce their taxable compensation and be reimbursed for qualifying dependent care expenses.




Designated Beneficiary


A Beneficiary determined under a properly filed form with the Plan Administrator, including, if applicable, spousal consent.




DFVCP


Delinquent Filer Voluntary Compliance Program, under which late Form 5500s may be voluntarily filed with reduced penalties if certain criteria are met.




Directed Trustee


A Trustee who does not exercise discretion regarding the assets of the plan, but who receives direction from the plan administrator or its delegee.




Discretionary Trustee


A Trustee who exercises discretion regarding the assets of the plan




DOL


The Department of Labor, which, among other things, regulates and enforces ERISA requirements.




Domestic Partner


A participant’s partner of the same or opposite sex who lives with the participant and they are involved in an interpersonal relationship sharing their domestic life as if married, however they are not legally married. May be registered or unregistered.




EAP


Employee Assistance Program, which offers one or more services intended to help employees in crisis such as counseling, legal services, or referrals.




EBSA


The Employee Benefits Security Administration, a department within the DOL, which is responsible for administering and enforcing the fiduciary, reporting and disclosure provisions of Title I of ERISA.




EGTRRA


The Economic Growth and Tax Reconciliation Relief Act of 2001, a comprehensive retirement plan law which required both interim amendments and restatements.




Elective Deferrals


Employee contributions of a portion of compensation to a 401(k), 403(b) or 457 plans. Either pre-tax or Roth.




Employee Benefit Plan


An Employee Pension Plan or an Employee Welfare Plan, or a plan which is both.




Employee Pension Plan (governed by ERISA)


Any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program (i) provides retirement income to employees, or

(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond




Employee Welfare Plan (governed by ERISA)


Any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in ERISA §186(c) (other than pensions on retirement or death, and insurance to provide such pensions).




Employer Contributions


Contributions to participant accounts such as matching contributions and non-elective/profit sharing contributions as well as contributions made by the employer to fund a defined benefit plan.




EOC, COC


The evidence of coverage or certificate of coverage, which describes the benefits provided for under an insurance contract such as medical, dental, vision, life, etc.




EPCRS


The Employee Plans Compliance Resolutions System, under which the IRS correction programs are operated, including SCP, VCP, and Audit CAP.

https://www.irs.gov/retirement-plans/epcrs-overview




ERISA


The Employee Retirement Income Security Act of 1974, which governs employee benefit plans and is enforced and regulated by the DOL.




Favorable Determination Letter


A letter issued by the IRS on the form of a qualified retirement plan document, issued to the individual plan sponsor.




Fiduciary


Any person who (1) exercises any discretionary authority or control over the management of a plan or the management of disposition of assets, (2) renders investment advice for a fee, or other compensation with respect to the funds or property of a plan, or has authority to do so, or (3) has discretionary authority or responsibility in the administration of a plan.

Meeting your Fiduciary Responsibilities: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/meetingyourfiduciaryresponsibilities.pdf




FMLA


The Family Medical Leave Act, which, among other things, provides eligible employees up to 12 workweeks of unpaid leave a year, and requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave.

https://www.dol.gov/agencies/whd/fmla/faq




Forfeitures


The part of an employee’s account balance, attributable to employer contributions, that is lost because it is not vested when the employee terminates employment.




Form 5500


The annual report required to be filed with the DOL (or IRS for non-employee retirement plans) each plan year for retirement plans and health and welfare plans.




Fringe Benefit Plan


A form of pay for the performance of services https://www.irs.gov/publications/p15b




FSA


A flexible spending account, which is an arrangement under a Cafeteria Plan, through which an employee may reduce their taxable compensation and be reimbursed for qualifying expenses.




Group Health Plan


An employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.




GUST


Common reference to a series of laws affecting retirement plans, including the Uruguay Round Agreements Act (GATT); Uniformed Services Employment and Reemployment Rights Act (USERRA); Small Business Job Protection Act (SBJPA); Taxpayer Relief Act of 1997 (TRA’97); IRS Restructuring and Reform Act of 1998 (IRRA); and Community Renewal Tax Relief Act of 2000 (CRA), which required both interim amendments and restatements.




Hardship Distribution


A distribution from a participant’s account that can only be made if the distribution is both: (1) due to an immediate and heavy financial need, and (2) limited to the amount necessary to satisfy that financial need.




HDHP


A High Deductible Health Plan, which is a group health plan that has a deductible which is not lower than the annual minimum deductible amount required for HSA eligibility.




Health FSA


A health flexible spending account, which is an arrangement under a Cafeteria Plan, through which an employee may reduce their taxable compensation and be reimbursed for qualifying health expenses.




HHS


Department of Health and Human services, that oversees HIPAA Privacy compliance.




HIPAA


The Health Insurance Portability and Accountability Act of 1996, which provides for privacy, security, nondiscrimination, and portability of group health plan coverage.




HRA


A Health Reimbursement Arrangement, under which an employer may reimburse a participant for qualified medical expenses.




HSA


A Health Savings Account, under which an eligible individual may make pre-tax or post-tax contributions to a custodial account, and from which the individual may be reimbursed for qualified medical expenses.




In-Service Distribution


A distribution taken while the participant is still employed




Individually Designed Plan


A qualified plan which may not rely on a pre-approved plan Opinion or Advisory Letter. May be a completely individually drafted document, or a pre-approved plan document which has been significantly modified.




Required Interim Amendment


An amendment required by law to be adopted by a plan sponsor between plan restatements.




Investment Policy Statement


A statement that defines a plan’s general investment goals and objectives. The purpose of the statement is to be used as a guide to the plan’s investment strategy.




IRA


An Individual Retirement Account, which allows individuals to save money for retirement on a tax-advantaged basis.




IRS


The Internal Revenue Service, which enforces and regulates the Code requirements applicable to employee benefits plans.




Key Employee


An employee who, at any time during the plan year, is— (1) an officer of the employer having an annual compensation greater than $150,000, (2) a 5-percent owner of the employer, or (3) a 1-percent owner of the employer having an annual compensation from the employer of more than $170,000.




Loan Policy


A qualified plan’s administrative policy regarding participant loans.




Matching Contributions


Employer contributions which are calculated based upon elective deferrals made by participants. Matching contributions may be discretionary or fixed under the terms of the plan document.




MEWA


Multiple Employer Welfare Arrangement is a welfare benefit plan under which employees of at least one unrelated employer participates. MEWAS have special filing requirements and may be subject to different requirements by state law.




MHPAEA


The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, a federal law that generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits.

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet




Multiemployer Plan


A retirement plan created through an agreement between two or more employers and a union. The employers are usually in the same or related industries, like construction or transportation. Multiemployer plans are run by a board of trustees, with an equal number of employer and union trustees.




Multiple Employer Plan


A retirement plan under which more than one employer participates and at least one employer is not a “related employer” with the others.




Non-Discrimination Testing


Testing which evaluates whether HCEs or Key Employees are receiving disproportionate benefits under a qualified retirement plan, a cafeteria plan, or a self-insured health plan.




Non-Elective Contributions, Profit-Sharing Contributions


Contributions made to a participant’s retirement plan account by the employer. These contributions may be discretionary or fixed, subject to profits or not, pro rata or tiered, based on participant compensation or integrated with social security.




Non-Qualified Deferred Compensation Plan


An elective or non-elective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee or independent contractor compensation in the future.

https://www.irs.gov/businesses/corporations/nonqualified-deferred-compensation-audit-techniques-guide




Opinion or Advisory Letter


A letter issued by the IRS which approves the form of a pre-approved plan document. An employer who adopts a pre-approved plan document may generally rely on the Opinion or Advisory Letter.




Partial Termination


Where there has been a significant turnover in participants during a plan year, such as due to a lay-off or series of lay-offs, triggering full vesting of affected participants.




Party-in-Interest


Almost any individual or any entity having anything to do with the plan, including fiduciaries; employees of the employer maintaining the plan; owners of the employer maintaining the plan; service providers to the plan, including recordkeepers; and certain others who are related to any of these people or entities.




PBGC


The Pension Benefit Guaranty Corporation, which is a federal agency created by ERISA to protect pension benefits in private-sector defined benefit plans.




Plan Administrator


A plan administrator is a person or company responsible for managing a retirement plan on behalf of its participants and beneficiaries.

  • Typically, the administrator is the employer or a committee to which plan administrator responsibilities have been delegated.




Plan Merger


The combining of two or more plans into a single plan.




Plan Restatement


A new version of an existing plan, which incorporates prior amendments. May be a discretionary restatement, a restatement required by law, or a restatement necessitated by a change in recordkeeper.




Plan Spin-Off


The splitting of a single plan into two or more plans.




Plan Sponsor


The party that establishes and maintains the plan, typically the employer, or an employee organization.




Plan Termination


Where a plan sponsor takes corporate action resulting in the cessation of all contributions to a retirement plan, no new participants enter the plan, and all assets of the plan are distributed.




Plan Year


The period over which a plan’s records are maintained, either a calendar year or other 12-month period.




POP


A premium only plan, which is a plan which provides for the pre-tax payment of premiums under Code §125.




PPA


The Pension Protection Act of 2006, a comprehensive retirement plan law which required both interim amendments and restatements.




Pre-Approved Plan


A qualified plan document which has been pre-approved by the IRS. Pre-approved plans may be standardized, non-standardized, or a volume submitter, and are generally, but not always, comprised of an Adoption Agreement and a Base Plan Document.




Prohibited Transaction


A transaction between a plan and a disqualified person that is prohibited by law. For example:

  1. a transfer of plan income or assets to, or use of them by or for the benefit of, a disqualified person;
  2. any act of a fiduciary by which plan income or assets are used for his or her own interest;
  3. the receipt of consideration by a fiduciary for his or her own account from any party dealing with the plan in a transaction that involves plan income or assets;
  4. the sale, exchange, or lease of property between a plan and a disqualified person;
  5. lending money or extending credit between a plan and a disqualified person; and
  6. furnishing goods, services, or facilities between a plan and a disqualified person.




Prohibited Transaction Exemption


A ruling by the DOL based on specific facts and circumstances that a transaction is allowable under ERISA regulations. In addition, there are statutory and class exemptions that apply to specified situations.




QDIA


A qualified default investment alternative, which is an investment in which the plan fiduciary invests assets in the absence of investment direction from the participant, that meets the requirements under 404(c) regulations providing a safe harbor to the “control over plan assets” requirement.




QDRO


A qualified domestic relations order, which is a court order establishing the interest of an Alternate Payee in the account of a plan participant, generally in the case of a divorce.




QDRO Procedures


Required written procedures for the administration of qualified domestic relations orders.




QMCSO


A qualified medical child support order, which is an order providing for the coverage of an individual, generally a child of a participant, under an employee’s group health plan.




QMCSO Procedures


Required written procedures for the administration of qualified medical child support orders




QNEC


A qualified non-elective contribution, which is an employer contribution subject to certain requirements, generally made to correct for testing or failures.




Qualified Plan


A retirement plan which is intended to be tax-qualified under Code §401(a).




Recordkeeper


A plan service provider that provides recordkeeping services to the plan. These services typically include maintaining records of the plan’s contributions, providing calculations, and dispersing enrollment and educational materials.




Registered Domestic Partner


A domestic partner, whose partnership with the participant is registered with the applicable state.




RMD


A required minimum distribution, which is the minimum amount a participant (or beneficiary) must withdraw from the participant’s account each year




Roth Contribution


An after-tax contribution made by the participant to the plan. Distributions are generally tax-free at retirement.




Safe Harbor 401(k) Plan


A plan which provides certain employer contributions and is subject to notice and other requirements, which relieves the plan of some nondiscrimination testing requirements.




Salary Reduction Contributions


Reductions in a participant’s salary that are contributed to a cafeteria plan on the participant’s behalf and are used for non-cash benefits under the cafeteria plan, such as the payment of premiums.




SAR


Summary Annual Report, which is a summary of the Form 5500, which is required to be provided to participants each year.




SBC


Summary of Benefits and Coverage for group health plans that offer major medical coverage, that must be provided to participants.




SCP


The Self-Correction Program, under EPCRS, which allows plan sponsors to self-correct recent plan failures or insignificant plan failures, without IRS approval.




SEP IRA Plan


A Simplified Employee Pension Plan, which allows employers to contribute to traditional IRAs set up for employees. A business of any size, even self-employed, can establish a SEP.

https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep




Services Agreement


The agreement under which a service provider such as a Recordkeeper, TPA, or other vendor provides services to a plan.




Short Plan Year


A plan year which is shorter than 12 consecutive months. Short plan years generally occur either in the first plan year, the final plan year, or if the plan year is being changed to a different 12-month period.




SIMPLE IRA Plan


A Savings Incentive Match Plan for Employees, which allows employees and employers to contribute to traditional IRAs set up for employees.

https://www.irs.gov/retirement-plans/plan-sponsor/simple-ira-plan




SMM


Summary of Material Modifications is a summary of an amendment to a plan which modifies the SPD.




SPD


Summary Plan Description is a summary of key plan provisions and must be provided to participants.




STD


Short Term Disability insurance is a plan which replaces income in the event of disability for a short period, generally less than 6 months.




Surviving Spouse


A spouse of a participant who is alive at the time of the participant’s death.




Top Hat Plan


A type of nonqualified deferred compensation plan that is established to provide unfunded deferred compensation benefits only to a select group of management or highly compensated employees and is exempt from most of the provisions of ERISA.




Top-Heavy Plan


A plan is top-heavy when Key Employees are allocated more than 60% of the value of the plan assets. This ratio is tested every year based on the account balances on the last day of the prior plan year.




TPA


A third-party administrator, which is an outside entity hired by the plan sponsor that administers the plan. TPAs typically provide a variety of services including non-discrimination testing, determining contribution limits, and preparing annual returns and reports.




Trust


A trust associated with an employee benefits plan, which holds the plan’s assets and is administered by an appointed trustee or trustees.




Trust Agreement


The agreement between the plan and the trustee setting out the terms of the trustee’s powers and responsibilities with regards to the assets of the plan.




Trustee


Individual(s) or institution who are responsible for plan assets held in the plan’s trust.




Unfunded


Funds for benefits are not formally set aside by employers but are paid out general assets or a rabbi trust.




USERRA


Uniformed Services Employment and Reemployment Rights Act




VCAP, Walk-In CAP


The Voluntary Closing Agreement Program, which allows plan sponsors to voluntarily submit plan failures and proposed corrections that do not qualify for correction under VCP and receive IRS approval through a negotiated closing agreement and sanction amount.




VCP


The Voluntary Correction Program, under EPCRS, which allows plan sponsors to voluntarily submit plan failures and proposed corrections and receive IRS approval evidenced by a compliance statement.




VFCP


Voluntary Fiduciary Correction Program, under which fiduciaries may self-correct certain violations with the DOL.

https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs




Voluntary Plan


A program which meets the safe harbor requirements that exempt it from the requirements of ERISA. These requirements are (i) No contributions are made by an employer, (ii) Participation in the program is completely voluntary for employees; (iii) The sole functions of the employer with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees, to collect premiums through payroll deductions and to remit them to the insurer; and (iv) The employer receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions.




Wellness Program


Programs and activities intended to help employees improve health and reduce health care costs. Some wellness programs ask employees to engage in healthier behavior, while other programs obtain medical information from employees by asking them to complete a health risk assessment or undergo biometric screening for risk factors. Wellness programs must meet certain requirements to comply with the nondiscrimination requirements of HIPAA and the Americans with Disabilities Act.




Wrap Document


A document which incorporates a variety of health and welfare benefits into a single ERISA plan, and which constitutes an ERISA-compliant governing plan document, SPD, or a combination of both.





A-B

ACA


The Affordable Care Act, officially known as the Patient Protection and Affordable Care Act, and commonly known as Obamacare, a comprehensive health care reform law effective in 2010.




ACP Test


Actual Contribution Percentage Test, which is a nondiscrimination test which compares the amount of Annual Additions received by HCEs and non-HCEs under a 401(k) or 403(b) plan.




AD&D


Accidental death & dismemberment insurance.




Adoption Agreement


The part of a pre-approved retirement plan document which provides for the optional provisions available under the document, and which is executed by the plan sponsor and participating employers when adopting the document.




ADP


Actual Deferral Percentage Test, which is a nondiscrimination test which compares the amount of deferrals made by HCEs and non-HCEs under a 401(k) plan.




Advisor


An outside person or entity who provides guidance and advice on managing the plan.




Alternate Payee


An individual who is entitled by a court order (a QDRO) to an interest in the account of a plan participant, generally a former spouse.




Amendment


A written change to plan terms which has been adopted by the plan sponsor. May be discretionary or required by law.




Annual Additions


Annual contributions to all of a participant’s accounts in plans maintained by one employer (and any related employer). These include:

  • Elective Deferrals (but not catch-up contributions)
  • Matching Contributions
  • Non-Elective Contributions
  • Allocations of Forfeitures




Audit CAP


The Audit Closing Agreement Program, under EPCRS, which is the program under which plan failures discovered during an IRS audit are corrected and sanctions are assessed.




Automatic Enrollment, Automatic Deferral


A plan feature that allows an employer to automatically deduct elective deferrals from an employee’s wages unless the employee makes an election not to contribute or to contribute a different amount.




Automatic Escalation


A plan feature that allows an employer to automatically increase in an annual basis, the amount of elective deferrals from an employee’s wages unless the employee makes an election not to contribute or to contribute a different amount.




Base Plan Document, BPD


The part of a pre-approved retirement plan document which provides for the non-optional, boilerplate provisions under the document.




Beneficiary


An individual or entity who is entitled, under the terms of the plan, to all or a portion of a participant’s account if the participant dies.





C-D

Cafeteria Plan, Flex Plan, 125 Plan


A plan which is tax-qualified under Code §125, providing a choice between cash or one or more permitted benefits, such as health insurance, flexible spending accounts, disability insurance, life insurance, etc.




COBRA


The Consolidated Omnibus Budget Reconciliation Act of 1986, which provides for the continuation of group health plan coverage upon the occurrence of certain events which would otherwise result in a loss of coverage.




Code


The Internal Revenue Code.




Committee


A plan’s administrative committee, which may be established by a plan sponsor and delegated some or all duties and powers of the plan administrator.




Compensation


A participant’s pay that is considered under the plan, as defined under the terms of the plan document.




Custodian


A plan service provider, typically a bank or other financial institution that holds plan assets.




Default Beneficiary


A Beneficiary determined under the terms of the plan where there is no Designated Beneficiary.




Defined Benefit Plan


A retirement plan which provides for a specified benefit be paid from the plan on retirement, such as a pension plan.




Defined Contribution Plan


A retirement plan which provides for a specified contribution or contributions to the plan, such as a profit-sharing plan, 401(k) plan, or money purchase pension plan.




Dependent Care FSA, DCAP


A dependent care flexible spending account, which is an arrangement under a Cafeteria Plan, through which an employee may reduce their taxable compensation and be reimbursed for qualifying dependent care expenses.




Designated Beneficiary


A Beneficiary determined under a properly filed form with the Plan Administrator, including, if applicable, spousal consent.




DFVCP


Delinquent Filer Voluntary Compliance Program, under which late Form 5500s may be voluntarily filed with reduced penalties if certain criteria are met.




Directed Trustee


A Trustee who does not exercise discretion regarding the assets of the plan, but who receives direction from the plan administrator or its delegee.




Discretionary Trustee


A Trustee who exercises discretion regarding the assets of the plan




DOL


The Department of Labor, which, among other things, regulates and enforces ERISA requirements.




Domestic Partner


A participant’s partner of the same or opposite sex who lives with the participant and they are involved in an interpersonal relationship sharing their domestic life as if married, however they are not legally married. May be registered or unregistered.





E-F

EAP


Employee Assistance Program, which offers one or more services intended to help employees in crisis such as counseling, legal services, or referrals.




EBSA


The Employee Benefits Security Administration, a department within the DOL, which is responsible for administering and enforcing the fiduciary, reporting and disclosure provisions of Title I of ERISA.




EGTRRA


The Economic Growth and Tax Reconciliation Relief Act of 2001, a comprehensive retirement plan law which required both interim amendments and restatements.




Elective Deferrals


Employee contributions of a portion of compensation to a 401(k), 403(b) or 457 plans. Either pre-tax or Roth.




Employee Benefit Plan


An Employee Pension Plan or an Employee Welfare Plan, or a plan which is both.




Employee Pension Plan (governed by ERISA)


Any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program (i) provides retirement income to employees, or

(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond




Employee Welfare Plan (governed by ERISA)


Any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in ERISA §186(c) (other than pensions on retirement or death, and insurance to provide such pensions).




Employer Contributions


Contributions to participant accounts such as matching contributions and non-elective/profit sharing contributions as well as contributions made by the employer to fund a defined benefit plan.




EOC, COC


The evidence of coverage or certificate of coverage, which describes the benefits provided for under an insurance contract such as medical, dental, vision, life, etc.




EPCRS


The Employee Plans Compliance Resolutions System, under which the IRS correction programs are operated, including SCP, VCP, and Audit CAP.

https://www.irs.gov/retirement-plans/epcrs-overview




ERISA


The Employee Retirement Income Security Act of 1974, which governs employee benefit plans and is enforced and regulated by the DOL.




Favorable Determination Letter


A letter issued by the IRS on the form of a qualified retirement plan document, issued to the individual plan sponsor.




Fiduciary


Any person who (1) exercises any discretionary authority or control over the management of a plan or the management of disposition of assets, (2) renders investment advice for a fee, or other compensation with respect to the funds or property of a plan, or has authority to do so, or (3) has discretionary authority or responsibility in the administration of a plan.

Meeting your Fiduciary Responsibilities: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/meetingyourfiduciaryresponsibilities.pdf




FMLA


The Family Medical Leave Act, which, among other things, provides eligible employees up to 12 workweeks of unpaid leave a year, and requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave.

https://www.dol.gov/agencies/whd/fmla/faq




Forfeitures


The part of an employee’s account balance, attributable to employer contributions, that is lost because it is not vested when the employee terminates employment.




Form 5500


The annual report required to be filed with the DOL (or IRS for non-employee retirement plans) each plan year for retirement plans and health and welfare plans.





G-I

Group Health Plan


An employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.




GUST


Common reference to a series of laws affecting retirement plans, including the Uruguay Round Agreements Act (GATT); Uniformed Services Employment and Reemployment Rights Act (USERRA); Small Business Job Protection Act (SBJPA); Taxpayer Relief Act of 1997 (TRA’97); IRS Restructuring and Reform Act of 1998 (IRRA); and Community Renewal Tax Relief Act of 2000 (CRA), which required both interim amendments and restatements.




Hardship Distribution


A distribution from a participant’s account that can only be made if the distribution is both: (1) due to an immediate and heavy financial need, and (2) limited to the amount necessary to satisfy that financial need.




HDHP


A High Deductible Health Plan, which is a group health plan that has a deductible which is not lower than the annual minimum deductible amount required for HSA eligibility.




Health FSA


A health flexible spending account, which is an arrangement under a Cafeteria Plan, through which an employee may reduce their taxable compensation and be reimbursed for qualifying health expenses.




HHS


Department of Health and Human services, that oversees HIPAA Privacy compliance.




HIPAA


The Health Insurance Portability and Accountability Act of 1996, which provides for privacy, security, nondiscrimination, and portability of group health plan coverage.




HRA


A Health Reimbursement Arrangement, under which an employer may reimburse a participant for qualified medical expenses.




HSA


A Health Savings Account, under which an eligible individual may make pre-tax or post-tax contributions to a custodial account, and from which the individual may be reimbursed for qualified medical expenses.




In-Service Distribution


A distribution taken while the participant is still employed




Individually Designed Plan


A qualified plan which may not rely on a pre-approved plan Opinion or Advisory Letter. May be a completely individually drafted document, or a pre-approved plan document which has been significantly modified.




Investment Policy Statement


A statement that defines a plan’s general investment goals and objectives. The purpose of the statement is to be used as a guide to the plan’s investment strategy.




IRA


An Individual Retirement Account, which allows individuals to save money for retirement on a tax-advantaged basis.




IRS


The Internal Revenue Service, which enforces and regulates the Code requirements applicable to employee benefits plans.





K-O

Key Employee


An employee who, at any time during the plan year, is— (1) an officer of the employer having an annual compensation greater than $150,000, (2) a 5-percent owner of the employer, or (3) a 1-percent owner of the employer having an annual compensation from the employer of more than $170,000.




Loan Policy


A qualified plan’s administrative policy regarding participant loans.




Matching Contributions


Employer contributions which are calculated based upon elective deferrals made by participants. Matching contributions may be discretionary or fixed under the terms of the plan document.




MEWA


Multiple Employer Welfare Arrangement is a welfare benefit plan under which employees of at least one unrelated employer participates. MEWAS have special filing requirements and may be subject to different requirements by state law.




MHPAEA


The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, a federal law that generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits.

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet




Multiemployer Plan


A retirement plan created through an agreement between two or more employers and a union. The employers are usually in the same or related industries, like construction or transportation. Multiemployer plans are run by a board of trustees, with an equal number of employer and union trustees.




Multiple Employer Plan


A retirement plan under which more than one employer participates and at least one employer is not a “related employer” with the others.




Non-Discrimination Testing


Testing which evaluates whether HCEs or Key Employees are receiving disproportionate benefits under a qualified retirement plan, a cafeteria plan, or a self-insured health plan.




Non-Elective Contributions, Profit-Sharing Contributions


Contributions made to a participant’s retirement plan account by the employer. These contributions may be discretionary or fixed, subject to profits or not, pro rata or tiered, based on participant compensation or integrated with social security.




Non-Qualified Deferred Compensation Plan


An elective or non-elective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee or independent contractor compensation in the future.

https://www.irs.gov/businesses/corporations/nonqualified-deferred-compensation-audit-techniques-guide




Opinion or Advisory Letter


A letter issued by the IRS which approves the form of a pre-approved plan document. An employer who adopts a pre-approved plan document may generally rely on the Opinion or Advisory Letter.





P

Partial Termination


Where there has been a significant turnover in participants during a plan year, such as due to a lay-off or series of lay-offs, triggering full vesting of affected participants.




Party-in-Interest


Almost any individual or any entity having anything to do with the plan, including fiduciaries; employees of the employer maintaining the plan; owners of the employer maintaining the plan; service providers to the plan, including recordkeepers; and certain others who are related to any of these people or entities.




PBGC


The Pension Benefit Guaranty Corporation, which is a federal agency created by ERISA to protect pension benefits in private-sector defined benefit plans.




Plan Administrator


A plan administrator is a person or company responsible for managing a retirement plan on behalf of its participants and beneficiaries.

  • Typically, the administrator is the employer or a committee to which plan administrator responsibilities have been delegated.




Plan Merger


The combining of two or more plans into a single plan.




Plan Restatement


A new version of an existing plan, which incorporates prior amendments. May be a discretionary restatement, a restatement required by law, or a restatement necessitated by a change in recordkeeper.




Plan Spin-Off


The splitting of a single plan into two or more plans.




Plan Sponsor


The party that establishes and maintains the plan, typically the employer, or an employee organization.




Plan Termination


Where a plan sponsor takes corporate action resulting in the cessation of all contributions to a retirement plan, no new participants enter the plan, and all assets of the plan are distributed.




Plan Year


The period over which a plan’s records are maintained, either a calendar year or other 12-month period.




POP


A premium only plan, which is a plan which provides for the pre-tax payment of premiums under Code §125.




PPA


The Pension Protection Act of 2006, a comprehensive retirement plan law which required both interim amendments and restatements.




Pre-Approved Plan


A qualified plan document which has been pre-approved by the IRS. Pre-approved plans may be standardized, non-standardized, or a volume submitter, and are generally, but not always, comprised of an Adoption Agreement and a Base Plan Document.




Prohibited Transaction


A transaction between a plan and a disqualified person that is prohibited by law. For example:

  1. a transfer of plan income or assets to, or use of them by or for the benefit of, a disqualified person;
  2. any act of a fiduciary by which plan income or assets are used for his or her own interest;
  3. the receipt of consideration by a fiduciary for his or her own account from any party dealing with the plan in a transaction that involves plan income or assets;
  4. the sale, exchange, or lease of property between a plan and a disqualified person;
  5. lending money or extending credit between a plan and a disqualified person; and
  6. furnishing goods, services, or facilities between a plan and a disqualified person.




Prohibited Transaction Exemption


A ruling by the DOL based on specific facts and circumstances that a transaction is allowable under ERISA regulations. In addition, there are statutory and class exemptions that apply to specified situations.





Q-R

Required Interim Amendment


An amendment required by law to be adopted by a plan sponsor between plan restatements.




QDIA


A qualified default investment alternative, which is an investment in which the plan fiduciary invests assets in the absence of investment direction from the participant, that meets the requirements under 404(c) regulations providing a safe harbor to the “control over plan assets” requirement.




QDRO


A qualified domestic relations order, which is a court order establishing the interest of an Alternate Payee in the account of a plan participant, generally in the case of a divorce.




QDRO Procedures


Required written procedures for the administration of qualified domestic relations orders.




QMCSO


A qualified medical child support order, which is an order providing for the coverage of an individual, generally a child of a participant, under an employee’s group health plan.




QMCSO Procedures


Required written procedures for the administration of qualified medical child support orders




QNEC


A qualified non-elective contribution, which is an employer contribution subject to certain requirements, generally made to correct for testing or failures.




Qualified Plan


A retirement plan which is intended to be tax-qualified under Code §401(a).




Recordkeeper


A plan service provider that provides recordkeeping services to the plan. These services typically include maintaining records of the plan’s contributions, providing calculations, and dispersing enrollment and educational materials.




Registered Domestic Partner


A domestic partner, whose partnership with the participant is registered with the applicable state.




RMD


A required minimum distribution, which is the minimum amount a participant (or beneficiary) must withdraw from the participant’s account each year




Roth Contribution


An after-tax contribution made by the participant to the plan. Distributions are generally tax-free at retirement.




Required Interim Amendment


An amendment required by law to be adopted by a plan sponsor between plan restatements.





S

Safe Harbor 401(k) Plan


A plan which provides certain employer contributions and is subject to notice and other requirements, which relieves the plan of some nondiscrimination testing requirements.




Salary Reduction Contributions


Reductions in a participant’s salary that are contributed to a cafeteria plan on the participant’s behalf and are used for non-cash benefits under the cafeteria plan, such as the payment of premiums.




SAR


Summary Annual Report, which is a summary of the Form 5500, which is required to be provided to participants each year.




SBC


Summary of Benefits and Coverage for group health plans that offer major medical coverage, that must be provided to participants.




SCP


The Self-Correction Program, under EPCRS, which allows plan sponsors to self-correct recent plan failures or insignificant plan failures, without IRS approval.




SEP IRA Plan


A Simplified Employee Pension Plan, which allows employers to contribute to traditional IRAs set up for employees. A business of any size, even self-employed, can establish a SEP.

https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep




Services Agreement


The agreement under which a service provider such as a Recordkeeper, TPA, or other vendor provides services to a plan.




Short Plan Year


A plan year which is shorter than 12 consecutive months. Short plan years generally occur either in the first plan year, the final plan year, or if the plan year is being changed to a different 12-month period.




SIMPLE IRA Plan


A Savings Incentive Match Plan for Employees, which allows employees and employers to contribute to traditional IRAs set up for employees.

https://www.irs.gov/retirement-plans/plan-sponsor/simple-ira-plan




SMM


Summary of Material Modifications is a summary of an amendment to a plan which modifies the SPD.




SPD


Summary Plan Description is a summary of key plan provisions and must be provided to participants.




STD


Short Term Disability insurance is a plan which replaces income in the event of disability for a short period, generally less than 6 months.




Surviving Spouse


A spouse of a participant who is alive at the time of the participant’s death.





T-Z

Top Hat Plan


A type of nonqualified deferred compensation plan that is established to provide unfunded deferred compensation benefits only to a select group of management or highly compensated employees and is exempt from most of the provisions of ERISA.




Top-Heavy Plan


A plan is top-heavy when Key Employees are allocated more than 60% of the value of the plan assets. This ratio is tested every year based on the account balances on the last day of the prior plan year.




TPA


A third-party administrator, which is an outside entity hired by the plan sponsor that administers the plan. TPAs typically provide a variety of services including non-discrimination testing, determining contribution limits, and preparing annual returns and reports.




Trust


A trust associated with an employee benefits plan, which holds the plan’s assets and is administered by an appointed trustee or trustees.




Trust Agreement


The agreement between the plan and the trustee setting out the terms of the trustee’s powers and responsibilities with regards to the assets of the plan.




Trustee


Individual(s) or institution who are responsible for plan assets held in the plan’s trust.




Unfunded


Funds for benefits are not formally set aside by employers but are paid out general assets or a rabbi trust.




USERRA


Uniformed Services Employment and Reemployment Rights Act




VCAP, Walk-In CAP


The Voluntary Closing Agreement Program, which allows plan sponsors to voluntarily submit plan failures and proposed corrections that do not qualify for correction under VCP and receive IRS approval through a negotiated closing agreement and sanction amount.




VCP


The Voluntary Correction Program, under EPCRS, which allows plan sponsors to voluntarily submit plan failures and proposed corrections and receive IRS approval evidenced by a compliance statement.




VFCP


Voluntary Fiduciary Correction Program, under which fiduciaries may self-correct certain violations with the DOL.

https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs




Voluntary Plan


A program which meets the safe harbor requirements that exempt it from the requirements of ERISA. These requirements are (i) No contributions are made by an employer, (ii) Participation in the program is completely voluntary for employees; (iii) The sole functions of the employer with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees, to collect premiums through payroll deductions and to remit them to the insurer; and (iv) The employer receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions.




Wellness Program


Programs and activities intended to help employees improve health and reduce health care costs. Some wellness programs ask employees to engage in healthier behavior, while other programs obtain medical information from employees by asking them to complete a health risk assessment or undergo biometric screening for risk factors. Wellness programs must meet certain requirements to comply with the nondiscrimination requirements of HIPAA and the Americans with Disabilities Act.




Wrap Document


A document which incorporates a variety of health and welfare benefits into a single ERISA plan, and which constitutes an ERISA-compliant governing plan document, SPD, or a combination of both.





###

280G


Code section which governs certain payments to executives because of a change in control of the company.




3(21) Fiduciary


An individual who provides investment advice for a fee. Under this type of arrangement, the plan sponsor retains the ultimate decision-making authority for the plan’s investments and may accept or reject any recommendations. Both the plan sponsor and the 3(21) fiduciary share the fiduciary responsibility.




3(38) Fiduciary


Any fiduciary (other than a trustee or named fiduciary), who has the power to manage, acquire, or dispose of any asset of a plan; who (1) is registered as an investment adviser under the Investment Advisers Act of 1940 with the SEC, or with a State, (2) is a bank; or (3) is an insurance company qualified to perform services and (4) has acknowledged in writing that he is a fiduciary with respect to the plan. Under such an arrangement, the plan sponsor is relieved of all fiduciary responsibility for the investment decisions made by the investment professional.




402(g) Deferral Limit


Code Section that limits the amount of elective deferrals which can be made by an individual in a calendar year.




401(k) Plan


A retirement plan which permits employees to make pre-tax salary deferrals and to which employers may make matching and/or non-elective contributions. Sometimes called a “cash or deferred arrangement”" or “CODA.”




403(b) Plan


A retirement plan (like a 401(k) plan) for certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers.




404(c) Plan


A plan which permits participants to direct the investment of the assets in their plan accounts, and which meets certain requirements under Code §404(c) that relieve plan fiduciaries of some liability for investment decisions.




409A


Code section which regulates nonqualified deferred compensation.




415 Limit


Code Section that limits the amount of Annual Additions which can be made for individual participants in a plan year.




457(b) Plan


Non-qualified, unfunded deferred compensation plan available for certain state and local governments and tax exempt entities.




457(f) Plan


Non-qualified, unfunded deferred compensation plans available for certain state and local governments and tax exempt entities.