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- Target Normal Cost
The present value (determined as of the date of the Actuarial Valuation) of all benefits under the pension plan that are expected to accrue during the current Plan Year based on prescribed actuarial assumptions and cost methods.
- Third Party Administrator
A party hired by a Plan Sponsor or Fiduciaries to aid in performing management and/or recordkeeping functions for the DC Plan.
- Top Heavy
A DC plan is tested annually for Top Heavy status. A plan is Top Heavy when more than 60% of the plan’s assets are attributable to Key Employees. If determined to be Top Heavy, the plan is subject to certain minimum contribution and vesting requirements.
- Traditional HMO
An HMO that provides no benefits for services obtained outside the network.
- Traditional IRA
Traditional Individual Retirement Account acronym. A retirement account to which an individual can make annual tax-deductible contributions according to annual limits that are specified by the IRS.
- Traditional Pension Plan
A pension plan that has a traditional defined benefit formula:
- Career earnings formula – Benefits are based on a percentage of an average of career earnings for every year of service recognized by the plan.
- Dollar amount formula – Benefits are based on a dollar amount per month for each year of service recognized by the plan.
- Final average earnings formula – Benefits are based on a percentage of average earnings during a specified number of years at the end of a worker’s career (or when earnings are highest), multiplied by the number of years of service recognized by the plan.
- Trustee
The entity or group of individuals who hold the assets of a plan in trust. Trustees are either designated in the Plan Document or appointed by another Fiduciary, typically the Plan Sponsor.