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We take pride in developing ‘bridges’ or ‘plans’ that allow our clients to move from their present situation to their future financial goals.

Glossary of Financial Terms

401(k) Plan A tax-deferred retirement plan that can be offered by businesses of any kind. A Company's 401(k) plan can be a "cash election" profit sharing or stock bonus plan, or a salary reduction plan.

403(b) Plan Section 403(b) of the Internal Revenue Code allows employees of public school systems and certain charitable and nonprofit organizations to establish tax-deferred retirement plans which can be funded with mutual fund shares.

Annuity Form of contract sold by life insurance companies that guarantees a fixed or variable payment to the annuitant at some time in the future, usually retirement. Annuities are either immediate or deferred.

Contingent Deferred Sales Charge (CDSC) A fee (or back-end load) imposed by certain funds on shares redeemed within a specific period following their purchase. These charges are usually assessed on a sliding scale, such as four percent to one percent of the amounts redeemed, with the fee reduced each year the shares are held.

Defined Contribution Plan An employer-sponsored plan in which contributions are made to individual participant accounts and the final benefit consists solely of assets (including investment returns) that have accumulated in these individual accounts. Depending on the type of defined contribution plan, contributions may be made either by the company, the participant, or both.

Department of Labor (DOL) The U.S. Department of Labor (DOL) deals with issues related to the American workforce - including topics concerning pension and benefit plans. Through its branch agency the Pension and Welfare Benefits Administration, the DOL is responsible for administering the provisions of Title I of ERISA.

ERISA Plan sponsors are required by law to design and administer their plans in accordance with the Employee Retirement Income Security Act of 1974 (ERISA). Among its statutes, ERISA calls for proper plan reporting and disclosure to participants.

Fees apply to all expenses paid for either out of plan assets, by the employer or the participant. As an example, fees include investment management, separate account fees, custodial fees, surrender charges , front-end or back-end loads, 12b1 fees, recordkeeping and administrative costs.

Fiduciary A person with the authority to make decisions regarding a plan's assets or important administrative matters. Fiduciaries are required under ERISA to make decisions based solely on the best interests of plan participants.

Internal Revenue Service (IRS) This branch of the U.S. Treasury Department is responsible for administering the requirements of qualified pension plans and other retirement vehicles. The IRS also worked with the DOL and the PWBC to develop Form 5500, and is now responsible for monitoring the data submitted annually on Form 5500 reports.

Investment Policy The governing document of a pension plan setting out its investment policy, guidelines, asset mix and degree of trustee involvement in investment oversight.

Money Market Fund A mutual fund seeking to generate income for participants through investments in short-term securities.

Mutual Fund A type of investment in which the money of many investors is pooled together to buy a portfolio of different securities. The fund is managed by professional(s) who invest in stocks, bonds, options, money market instruments or other securities.

Named Fiduciary The plan document must name one or more fiduciaries, giving them the authority to control and manage the operation of the plan. The named fiduciary must also be identified as a fiduciary by a procedure specified in the plan document.

Non-qualified Plan A pension plan that does not meet the requirements for preferential tax treatment. This type of plan allows an employer more flexibility and freedom with coverage requirements, benefit structures, and financing methods.

Participant Directed Account A plan that allows participants to select their own investment options.

Plan Administrator The individual, group or corporation named in the plan document as responsible for day-to-day operations. The plan sponsor is generally the plan administrator if no other entity is named.

Plan Participant Person who has an account in the plan and any beneficiaries who may be eligible to receive an account balance.

Plan Sponsor The entity responsible for establishing and maintaining the plan.

Qualified Plan A private retirement plan that meets the rules and regulations of the Internal Revenue Service. Contributions to such a plan are generally tax-deductible; earnings on such contributions are always tax sheltered until withdrawal.

Service Provider A company that provides any type of service to the plan, including managing assets, recordkeeping, providing plan education, and administering the plan.

Surrender Charge A fee imposed for terminating an annuity contract prior to its maturity.

Trustee The individual, company, bank or trust company having fiduciary responsibility for holding plan assets.


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