A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
AGI (Adjusted Gross Income)
All the money earned in a calendar year, less certain adjustments for alimony, moving expenses, deductible retirement-plan contributions and other deductions.
Investments considered outside of the traditional asset classes of stocks, bonds and cash. Examples of alternative investments include real estate, commodities and precious metals. Alternative investments are often used by hedge funds.
Annual Contribution Limits
The amount of money allowed for contribution to an IRA or HSA each year. Annual contributions to a Roth IRA, for example, are limited to a maximum annual amount minus the taxpayer’s traditional IRA contributions.
Certificates issued by a government or a public company promising to repay borrowed money at a fixed rate of interest at a specified time.
Certificate of Deposit (CD)
Certificates issued by a bank to a person depositing money for a specified length of time.
In addition to annual contributions, qualified IRA contributions also include “conversions” to a Roth IRA. These rollover funds are treated as additional contributions with applicable IRA regulations.
Any amount of funds taken out of the IRA or HSA account. Traditional, Roth, SEP or SIMPLE IRA distributions may be comprised of earnings, additional contributions and/or conversions. IRA owners are encouraged to review the Traditional and/or Roth IRA rules to determine if the distributions are subject to tax and/or penalty. HSA owners are encouraged to review the rules regarding HSA distributions.
The money earned in the IRA as it grows in value, above and beyond the contributions that are made from year to year.
Exchange Traded Funds (ETFs)
A basket of securities similar to mutual funds. However, they trade on exchanges (like stocks) during market trading hours.
Health Savings Account (HSA)
A health savings account is a tax-advantaged medical savings account available to taxpayers who are enrolled in an eligible High Deductible Health Plan.
Individual Retirement Account (IRA)
A specific retirement account established with a qualified financial institution, such as a bank, trust company, broker, custodian or mutual fund, in which contributions may be invested in many types of traditional investments, such as stocks, bonds and money market accounts, or alternative investments, such as real estate, hedge funds and futures.
Modified Adjusted Gross Income
In the United States, the amount of income used to determine how much of a taxpayer's IRA contributions are tax deductible. One calculates the modified AGI by taking the adjusted gross income and adding back various deductions, notably interest on student loans, foreign income deductions, foreign housing deductions, and higher education costs. Depending on the modified AGI, some or all of one's IRA contributions will not be deductible.
Money Market Accounts
A deposit account that may have transaction and balance restrictions but typically offers a competitive interest rate.
An investment in which the money of many individual investors in pooled together and used it to buy a diversified and managed portfolio of securities.
Qualified Distribution (Roth IRA)
A withdrawal from a Roth IRA that is:
- Made on or after the date the account owner becomes age 59-1/2.
- Made to a beneficiary or to the estate after the account owner dies;
- Made to the account owner should he/she become disabled within the definition of the IRS code; or,
- Used to pay for qualified first-time homebuyer expenses.
However, even if one of the qualification above is met, the distribution is still not qualified if it is made within a five tax-year period following the first day of the year in which there first was a contribution or a conversion to the Roth IRA.
Required Minimum Distribution (RMD)
The minimum annual required distribution amount for an IRA holder who reaches age 70 ½.
When the plan administrator of your former employer establishes a self-directed IRA at Millennium Trust on your behalf and deposits in it the full amount of your distribution from the retirement plan.
An IRA authorized by legislation on or after January 1, 1998, in which contributions are not deductible, “qualified’ distributions - or withdrawals - from the account are not taxable, and earnings on the account are taxable only when a withdrawal is not “qualified.”
SEP (Simplified Employee Pension) IRA
The SEP IRA allows employers to make contributions to their employees' retirement accounts of up to 25 percent of the employee's compensation, or $42,000, whichever is less. As their personal contribution, the employee may contribute the smaller of $4,000 or 100 percent of their compensation to the SEP IRA annually.
SIMPLE (Savings Incentive Match Plan for Employees) IRA
The SIMPLE IRA enables employers with fewer than 100 employees to establish an individual retirement account for each participating employee. The SIMPLE IRA has requirements similar to a Traditional IRA, however individual contribution limits are higher. The employer can match all or a part of the employee's contribution.
A Traditional or Roth IRA funded by a married taxpayer in the name of his or her spouse who has less than the maximum allowable IRA contribution in annual compensation. The couple must file a joint tax return for the year of the contribution. The working spouse may contribute up to the maximum annual limits to the spousal and his/her own Traditional or Roth IRA.
The capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity).
An individual retirement account that may have tax-deductible and non-deductible contributions, and in which earnings accrue tax-deferred.
Commonly used investment assets such as equities, bonds, mutual funds and money market products.
Unrelated Business Income Tax (UBIT)
The tax on unrelated business taxable income is called Unrelated Business Income Tax (UBIT) and applies to Individual Retirement Accounts (IRAs) including Traditional, Roth, SEP and SIMPLE IRAs. For more information, see IRS Publication 598.
Unrelated Business Taxable Income (UBTI)
Unrelated Business Taxable Income (UBTI) is generally defined as the gross income derived from any unrelated trade or business regularly carried out by an exempt organization. For more information, see IRS Publication 598.