Glossary

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401(k)

The 401(k) plan is a workplace retirement plan. It allows workers to defer a certain portion of their wages into a retirement account, which they can then invest for the future. In return, workers get certain tax advantages both in the short term and the long term.

401(k) matching contributions

401(k) matching contributions are the additional contributions made by employers, on top of the contributions made by employees. These matches are made on a percentage basis, such as 25%, 50% or even 100% of the employee’s contribution amount, up to a limit of total employee compensation.

403(b) plan

A 403(b) plan is a workplace retirement plan — typically offered by public schools and higher education institutions, churches, and charitable entities — designed to help employees save for retirement while receiving tax benefits.

401(k) loan

A 401(k) loan allows you to borrow from the balance you’ve built up in your retirement account. Generally, if allowed by the plan, you may borrow up to 50% of your vested balance, for a maximum loan amount of $50,000.

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Recent Terms

SEP IRA

A SEP IRA — short for simplified employee pension plan — is a tax-advantaged retirement plan designed for business owners. While it can be used by businesses of any size, it’s often used by small business owners and self-employed individuals.

High earner, not yet rich (HENRY)

HENRY is an acronym for "high earner, not yet rich." It is used to describe someone who earns a high income, usually between $100,000 to $500,000, but has not saved or invested enough to be considered rich. HENRYs typically spend a large portion of their earnings on expenses and purchases.

Non-deductible IRA

A non-deductible IRA is not a type of retirement account. Instead, it refers to non-deductible contributions made to a traditional retirement account. This retirement savings strategy is for those whose income exceeds the limits to make deductible IRA contributions or to contribute to a Roth IRA.