1035 Exchange

1035 exchange is specified by the tax code section 1035, which allows the exchange of contracts without losing the tax-deferred status of the interest. Must be an exchange of the entire contract, and must be a direct company to company transfer. Permissible exchanges include: annuity to annuity, life to annuity, life to life, endowment to endowment and endowment to annuity.

12b-1 FEE

12b-1 fee is an assessment on shareholders of certain mutual funds to cover sales and marketing expenses. These fees are generally prevalent in funds sold by brokers, insurance agents and financial planners

401(k)

It is a retirement investment option that allows an employee to put a percentage of earned wages into a tax-deferred investment account selected by the employer. 401(k) is also called salary reduction plan.

401(k) Plan

A deferred compensation plan set up by an employer. Under this plan a portion of your earnings is deducted and placed in a qualified retirement plan. Your employer may match a percentage of the amount you have withheld. In this plan you are not taxed on either the amount deducted from your pay or your employer's matching amount until you receive distributions, usually at retirement.

403(b)

It is a type of qualified retirement plan available for public education and tax-exempt organizations that uses tax-deferred annuity or mutual funds. It has tax treatment extremely similar to a 401(k) plan and permits pre-tax contributions by employees to be made to an individual accounts. The contributions and income earned on the account are deferred from income taxes until withdrawn at retirement. There are income tax penalties, and possible plan penalties for early withdrawals. Some plans do permit loans as well.

403(b) Plan

403(b) Plan is a deferred compensation plan set up by an employer. A portion of your earnings is deducted and placed in a qualified retirement plan. Your employer may match a percentage of the amount you have withheld. You are not taxed on either the amount deducted from your pay or your employer's matching amount until you receive distributions, usually at retirement.

10% Penalty Tax

10% Penalty Tax refers to the 10% IRS fee charged upon the withdrawal of contributions or earnings from an annuity before the age of 59.5.