Glossary of Employee Compensation and Retirement Terms, Quizzes of Business Taxation and Tax Management

Download Glossary of Employee Compensation and Retirement Terms and more Quizzes Business Taxation and Tax Management in PDF only on Docsity! TERM 1 Bargain element DEFINITION 1 the excess of fair market value over cost of stock acquired on exercise of a stock option. TERM 2 Cafeteria plan DEFINITION 2 a compensation plan under which employees may choose among two or more benefits, including both cash and non- cash items. TERM 3 Deferred compensation DEFINITION 3 a non-qualified plan under which an employer promises to pay a portion of an employee's current compensation in a future year. TERM 4 Defined-benefit plan DEFINITION 4 a qualified plan under which participants are promised a targeted benefit, usually in the form of a pension, when they retire. TERM 5 defined-contribution plan DEFINITION 5 a qualified plan under which an annual contribution is made to each participant's retirement account. TERM 6 Employee DEFINITION 6 an individual who performs services for compensation and who works under the direction and control of an employer. TERM 7 Employee stock ownership plan (ESOP) DEFINITION 7 a qualified defined contribution plan in which contributions are invested primarily in the corporate employer's common stock. TERM 8 Employer-provided plan DEFINITION 8 a retirement plan sponsored and maintained by an employer for the benefit of the employees. TERM 9 Expatriate DEFINITION 9 an individual who is a U.S. citizen and resides and works for an extended period in a foreign country. TERM 10 Foreign earned income exclusion DEFINITION 10 an annual amount of foreign source earned income on which expatriates are not required to pay federal income tax. TERM 21 Rollover IRA DEFINITION 21 an IRA created to receive distribution from another qualified retirement plan. TERM 22 Roth IRA DEFINITION 22 an investment account through which individuals with compensation or earned income can save for retirement on a tax-exempt basis. TERM 23 Section 401(k) plan DEFINITION 23 a defined-contribution plan under which employees elect to contribute a portion of current year compensation to an employer-provided retirement plan. TERM 24 Stock option DEFINITION 24 the right to purchase corporate stock for a stated price (the strike price) for a given period of time. TERM 25 Traditional IRA DEFINITION 25 an investment account through which individuals with compensation or earned income can save for retirement on a tax-deferred basis.