401(k) plan: a plan that allows employees to contribute a portion of their pretax salary to a tax-deferred retirement plan, allowing the contributed funds to grow free of taxes until the money is withdrawn. Many companies encourage participation in the plan by matching employee contributions. Contributions can be invested in a variety of investment vehicles.

403(b) plan: a plan that allows employees of nonprofit or educational organizations to contribute a portion of their pretax salary to a tax-deferred retirement plan, allowing the contributed funds to grow free of taxes until the money is withdrawn. Many companies match employee contributions. Contributions can be invested in a variety of investment vehicles.

SIMPLE IRA: a plan for small organizations that allows employees to contribute on a pretax basis, and requires the employer to make either matching contributions or a non elective contribution for all eligible employees. These contributions are held in a special Individual Retirement Account (IRA) known as a SIMPLE IRA.

Simplified Employee Pension (SEP) IRA: a pension plan for owners of small companies in which the employer contributes to an Individual Retirement Account (IRA) on behalf of the employee. Employees do not benefit from making pretax contributions.

Profit-sharing plan: a type of defined contribution plan funded with discretionary employer contributions and often tied to company profits.

Defined benefit plan: a tax-deferred company retirement plan, such as a pension, in which the benefit to participants is defined in advance, based on criteria such as salary history and years of service, and in which the employer bears the investment risk.

Defined contribution plan: an individual account plan, such as a 401(k), that provides a benefit based solely on the amount contributed to the participant’s account plus or minus any income, expenses, gains and losses, and forfeitures that may be allocated to the account.

IRA's

Individual Retirement Account (IRA): a tax-deferred retirement account for individual investors.

Individual Retirement Account (IRA) rollover: a tax-free reinvestment of a distribution from a qualified company retirement plan such as a 401(k) into an IRA. The rollover must be deposited within 60 days of the distribution to qualify. This 60-day requirement may be waived by the IRS. An IRA rollover allows these funds to continue to accumulate tax-deferred until they are withdrawn.

Types of Individual Retirement Account (IRA)

Traditional IRA: an Individual Retirement Account in which funds grow tax-deferred until they are withdrawn at age 59-1/2 or later. Mandatory distributions from a Traditional IRA begin by age 70-1/2. Contributions are deductible against earned income under certain circumstances, depending on income levels and retirement plan participation.

Roth IRA: a type of Individual Retirement Account (IRA), which allows funds to grow tax-free, subject to certain restrictions. Usually the account must be held for at least five years and withdrawals must be made after age 59-1/2. Taxes are paid on contributions to a Roth IRA, but qualified withdrawals are tax-free. Unlike a Traditional IRA, there is no requirement to begin taking distributions at age 70-1/2.

•  Premature withdrawals may be subject to IRS penalties.