Category: Definitions

A bond that does not pay a periodic interest payment, but trades a deep discount. Profits are earned at maturity when the bond is redeemed for its full face value. Even though the investor does not receive any income payments, … Continue reading →

A plan that individuals may establish to save for retirement. If a taxpayer meets certain requirements, contributions are deductible from earned income in the calculation of federal and state income taxes. Earnings accumulate tax-deferred, and withdrawals are taxed as ordinary … Continue reading →

The amount of income that is used to calculate income tax due. It is determined by subtracting any deductions, exemptions, or other adjustments from gross income.

The interest from bonds issued by states, cities, or other government agencies may exempt from federal income taxes under certain circumstances. The interest from these bonds may also be exempt from state and local income taxes in many states as … Continue reading →

Investment earnings that accumulate tax-free until they are withdrawn. This includes earnings from interest, dividends, and capital gains.

An annuity that only provides payments to one person. Payments cease when the annuitant dies, and there are no rights of payment to any survivor.

A retirement plan that can be establish by an employer or self-employed individuals. An employer makes contributions to each eligible employee’s SEP IRA and are allowed a tax deduction for contributions made to the plan.

There are several types of retirement plans that can be established by a self-employed individual. They include, but are not limited to, SEP IRAs, SIMPLE 401(k)’s, or self-employed 401(k)’s.

The process of transferring the holdings of one retirement plan to another without suffering tax consequences. There are two types of rollovers, direct and 60-day. In a direct rollover, assets are transferred directly between one retirement account to another. In … Continue reading →

Minimum amounts that an owner of a Traditional, SEP, or SIMPLE IRA or qualified plan participants must begin withdrawing annually from their retirement accounts by April 1 after the year they reach age 70.5.