401(k)
BasicsAn employer-sponsored retirement plan that can allow eligible employees to make elective contributions from compensation.
Full definition →
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Confused by terms like vesting, elective deferral, Roth 401(k), rollover or required minimum distribution? Use this glossary to understand common 401(k) and retirement terminology in straightforward language.
Retirement plans use technical terminology for contributions, taxes, investments, distributions and plan administration. This glossary provides concise educational definitions.
A 401(k) is an employer-sponsored retirement plan that can allow eligible employees to make elective contributions from compensation. Plans may also provide employer contributions and different tax treatment options.
Read the Full 401(k) Guide →Search by retirement term, abbreviation or concept.
Start with the basic terms used to describe how a 401(k) plan works.
An employer-sponsored retirement plan that can allow eligible employees to make elective contributions from compensation.
Full definition →A person or entity designated to receive benefits from a retirement account after the participant's death, subject to applicable rules.
Learn more →The process by which certain employer contributions become nonforfeitable under a plan's vesting schedule.
Learn more →The legal document that establishes the terms and rules governing a retirement plan.
Learn more →Compensation an eligible employee elects to contribute to a retirement plan instead of receiving it currently as wages.
Learn more →A retirement plan in which contributions are defined, while the eventual account value depends on contributions, investment performance and other factors.
Learn more →Learn the terminology used when discussing employee, employer, Roth and after-tax contributions.
Money contributed to a retirement plan by an employee, employer or another permitted source.
Full guide →A contribution made by an employee through the retirement plan's permitted contribution arrangements.
Learn more →An employer contribution generally based on an employee's eligible contributions according to the plan's matching formula.
Full guide →An additional contribution permitted for eligible participants who meet applicable age and plan requirements.
Learn more →A non-Roth employee contribution made from compensation that is included in income and is not deductible, subject to plan rules.
Full guide →The percentage of eligible compensation an employee elects to contribute through the plan.
Learn more →Understand common investment terms you may encounter inside a 401(k) account.
An investment choice made available to participants through the plan's investment menu.
Full guide →An investment fund designed to track the performance of a specified market index or benchmark.
Learn more →A diversified investment fund designed around an approximate target retirement year and generally adjusted over time.
Learn more →Spreading investments across different assets or investment exposures rather than concentrating entirely in one area.
Learn more →A fund's operating expenses expressed as a percentage of assets, generally reflected in the fund's returns.
Learn more →Adjusting a portfolio's holdings to bring its allocation back toward a chosen target allocation.
Learn more →Understand the terminology behind traditional and Roth contribution treatment.
A designated Roth account within an eligible retirement plan where designated Roth contributions are included in gross income when contributed.
Full guide →An elective contribution made to a plan's designated Roth account and included in gross income when contributed.
Learn more →A distribution that satisfies applicable requirements for the tax treatment associated with a qualified distribution.
Learn more →A contribution that generally receives tax treatment different from a designated Roth contribution and may reduce current federal taxable income, subject to applicable rules.
Learn more →Delaying taxation on certain retirement contributions or investment earnings until a later taxable event, subject to applicable rules.
Learn more →A retirement-plan distribution that is included in taxable income under applicable federal tax rules.
Learn more →Learn the vocabulary used when moving retirement assets between plans and accounts.
A transaction that moves an eligible retirement-plan distribution to another eligible retirement plan or IRA.
Full guide →A rollover in which eligible retirement funds are transferred directly between the distributing plan or provider and the receiving eligible retirement account or plan.
Learn more →A rollover in which a distribution is first paid to the participant and the participant subsequently completes an eligible rollover within the applicable rules and deadline.
Learn more →Moving eligible assets from a 401(k) into an IRA through a permitted rollover transaction.
Learn more →Tax consequences that can arise when a retirement distribution is not rolled over correctly or when taxable amounts are moved between account types.
Learn more →A 401(k) account associated with a previous employer that may remain in the former plan or potentially be eligible for a rollover.
Learn more →These terms describe what can happen when money leaves a retirement plan.
A payment or withdrawal of assets from a retirement plan or retirement account.
Full guide →A retirement-plan distribution taken before the applicable age or event requirements for normal distributions are met.
Learn more →An additional tax that can apply to certain early retirement distributions unless an exception applies.
Learn more →A distribution permitted by some retirement plans when applicable hardship requirements are satisfied.
Learn more →A loan from a retirement plan that is permitted only when the plan offers a loan feature and applicable requirements are met.
Learn more →A required minimum distribution that certain retirement account owners must take under applicable tax rules.
Full guide →Understand the basic vocabulary used when reviewing retirement plan costs.
Fees associated with operating and administering a retirement plan.
Learn more →Costs associated with managing and operating investments available through a retirement plan.
Learn more →Fees that may apply when a participant uses optional plan-related services.
Learn more →Connect 401(k) terminology with broader retirement planning concepts.
The process of estimating retirement needs and organizing savings, investments and potential income sources.
Full guide →Money available during retirement from sources such as retirement accounts, Social Security, pensions and other eligible assets.
Learn more →Assets accumulated for use during retirement, including savings held in retirement accounts and other investments.
Learn more →The age at which a person becomes eligible for their full Social Security retirement benefit based on their birth year.
Learn more →Once you understand the terminology, use the site's calculators to explore contribution and retirement scenarios.
Quick answers about using retirement terminology and this glossary.
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