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Money Purchase and Profit-Sharing Plans Not all companies offer money purchase plans, but if they do, the employer is required to contribute to the plan each year on behalf of the participants or employees. In some plans, the employee may also be able to contribute a portion of their income. It was once fairly common to pair these plans with profit-sharing plans, which gives companies the benefit of high input limits and a degree of flexibility in choosing the number of each year’s payments....

Complexio / Getty Images Definition and Examples of a Nest Egg The term “nest egg” comes from a 17th-century farming practice, where farmers would leave both real and decoy eggs in the henhouse to encourage the hens to lay more eggs, which would generate more income for the farmers. Today, a nest egg refers to a specific type of long-term savings often used to support a major life goal, such as retirement....

For instance, if you’re buying a home and your contract with the seller stated that they needed to repair the deck, they are legally bound to do so. If they don’t repair the deck or cannot prove that there is a work order to do it, you cannot cancel the contract right away. You have to deliver a notice to perform. Once the notice is delivered, the seller has a set amount of time (usually about 48 hours) to meet the requirements of the notice....

Acronym: QPRT How a QPRT Works Suppose you want your son to inherit your house, but you’re not ready to move out just yet. In order to reduce the impact that holding on to the house will have on your taxable estate, you can set up a qualified personal residence trust for 10 years. Suppose the house is worth $400,000 at the time you set up the trust. Ten years from now, it may be worth $550,000....

As the name implies, there’s a “fence” that creates a protective ring around the separated assets or business unit. This can be a figurative border that is simply understood to exist; or it can involve a clear legal separation and definitive actions, such as creating separate bank accounts. Alternate names: Ring-fence, ringfence, ringfencing, ring-fencing For example, in the UK, regulations stemming from the aftermath of the financial crisis require large UK banks to ring fence their retail banking units from other parts of banks, which means legally separating these sides....

You can invest in two types of savings bonds with a savings bond plan: Both types of savings bonds are sold at face value and accrue interest monthly. Interest compounds semi-annually until the bonds reach their 30-year maturity date or you cash them out—whichever happens first. You receive the interest that accrued when you redeem the bond. You can cash out both types of savings bonds after 12 months, but if you do so within the first five years, you’ll forfeit three months of interest....

A corporation may offer shares through an initial public offering (IPO) because it wants to transition from a private to a public company, raise money for expansion, develop new products and services, or pay off debt. The public can buy those shares through a brokerage firm. Once you’re a shareholder, you have a claim to the company’s earnings and assets, and a right to vote on certain management decisions. For example, in May 2021, the shareholders of Chevron Corporation voted to approve a proposal to reduce emissions from the use of its products....

As the name suggests, tax shields protect taxpayers from paying taxes on their full income. The Internal Revenue Service (IRS) allows businesses and individuals to deduct certain qualified expenses, thereby lowering their taxable income and their ultimate tax liability. This tax-efficient investment method is used particularly by high-net-worth individuals and corporations that face steep tax rates. However, tax shields do not only benefit the wealthy. Many middle-class homeowners opt to deduct their mortgage expenses, thus shielding some of their income from taxes....

dusanpetkovic / Getty Images This happens most frequently when a company is positioned to release significant information that may affect the market price of its securities. It also happens when the exchange believes the security may no longer meet listing requirements. Nonregulatory halts are imposed when an imbalance exists between buy and sell orders for a particular security. This is done to notify potential buyers and sellers that the imbalance has occurred, and give the designated specialists time to notify the market of the price range in which trading can resume as part of their function to ensure that the market remains “fair and orderly....

Overt pay discrimination is against the law. Title VII of the Civil Rights Act, the Equal Pay Act, and the Americans With Disabilities Act prohibit employers from paying different wages to workers based on race, color, religion, sex, national origin, age, or disability. But workers of different protected classes still earn less than their colleagues who don’t belong to the same demographics. If you experience the effects of one or more wage gaps in your career, the first step is to understand what you’re up against....

A limit of $100,000 of income saved or earned in an ABLE account gets protection from Medicaid asset seizure. To be eligible for an ABLE account, the disability must have been identified by age 26, as mentioned, and the recipient must be receiving Supplemental Security Income (SSI) and/or Social Security Disability Insurance (SSDI). If both of those requirements are met, then you can be automatically enrolled in an ABLE account....

Account holders can set up AFTs from savings to checking accounts for overdraft protection, holiday or vacation savings, or recurring monthly loan payments. The account holder approves AFTs in advance, allowing the bank to remove money from their account on the specified date. Alternate name: Automatic funds transferAcronym: AFT For example, a bank customer can schedule an automatic transfer from their checking account to their savings account every payday, or a parent may automatically move money into a child’s account every month....

An interest rate floor is often used in variable-rate loan products, like an ARM. An ARM comes with a certain level of unpredictability to both the borrower and the lender because the rates will change over time. An ARM differs from a fixed-rate mortgage, which has the same interest rate for the life of the loan. Let’s look at an example. For instance, if you took out a 5/1 ARM, that means you will have a fixed interest rate for the first five years....

Common stocks allow shareholders to vote on corporate issues, such as the board of directors and takeover bids. Most of the time, stockholders receive one vote per share. Stockholders also receive a copy of the corporation’s annual report. Many corporations also give stockholders dividend payouts, which will change based on how profitable the company is. Alternate Names: Shares, Equities How Common Stock Works Stocks are bought and sold throughout the day on stock exchanges, and the price of a share of a stock goes up or down, depending on the demand....

“A lot of people think, ‘I don’t like the terms of the will’ or ‘That’s not what Mom or Dad told me, so I’m going to challenge the will.’ But it’s not so simple,” said Patricia Davidson, a Massachusetts-based attorney who helps families resolve issues involving wills, trusts, and real estate. To contest a will, Davidson said, you must have evidence to back up your claims, not just a hunch, suspicion, or sense of unfairness....

Partners in a DINK couple may or may not be married, and they could be a same-sex or a heterosexual couple. What each DINK couple has in common is that they do not have children living in their household who they are raising or supporting. How DINK Works As mentioned, DINK couples are often viewed as having more disposable income because they do not have to bear the costs associated with raising a child....

Finding the expected return of an asset involves calculating the probability of various possible outcomes based on historical rates of return. In other words, if history repeated itself, what are the chances of earning that profit on your investment? When you find the probability of several different return outcomes, combine them to find the total expected return. For example, suppose a fund had a 25% chance of a -3% return, a 50% chance of a 3% return, and a 25% chance of a 9% return....

The program provides up to $9,000 for each deceased individual. If you incurred funeral expenses for more than one person, you would include all the information on one application. The maximum amount you can receive is $35,000. Since the effects of the COVID-19 pandemic are still ongoing, here’s more information about who qualifies for this specific FEMA Funeral Assistance program. The person applying for assistance must be a U.S. citizen, a non-citizen national, or a qualified alien....

Alternate name: Loan forbearance Types of hardships can be wide-ranging. They can include medical emergencies, permanent disability, job loss, temporary unemployment, natural disaster, divorce, and more. For instance, from March 13, 2020, to Aug. 31, 2022, federal student loan borrowers are being placed in administrative forbearance. During this time, federal student loan payments are automatically paused. However, people can choose to make payments if they wish. How Does Forbearance Work?...

An Example of Form 1040 You are an employee at a bank where you earn $40,000 per year. When tax season rolls around, you’ll need to file a return. So, you use a tax prep app to fill out a 1040 and all the required schedules and forms. You send the completed 1040 to the IRS via the app, and the IRS notifies you once it accepts your return. Who Uses Form 1040 Most taxpayers in the U....