Allocation Of Plan Assets On Termination

AAA

DEFINITION of 'Allocation Of Plan Assets On Termination'

The procedure that occurs upon the termination of any kind of pension plan. The allocation of plan assets on termination can occur in one of two ways: either each employee is repaid his or her contributions plus interest, or else the employees are categorized based on their entitlement to benefits.

INVESTOPEDIA EXPLAINS 'Allocation Of Plan Assets On Termination'

The allocation of plan assets is usually done by the plan administrator or trustee. Obviously, different types of employees will favor one type of allocation over the other. For example, highly compensated employees may come out ahead in the latter type of allocation listed above, while rank-and-file employees may benefit more from the former.

RELATED TERMS
  1. Distribution

    1. When trading volume is higher than that of the previous day ...
  2. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  3. Pension Plan Administrator

    An individual responsible for managing the day-to-day affairs ...
  4. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
  5. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  6. Employer-Sponsored Plan

    A type of benefit plan that an employer offers for the benefit ...
Related Articles
  1. Entrepreneurship

    Business Owners: Rules For Qualified Retirement Plans

    Business owners need to take note of how they handle qualified-plan distributions to former employees.
  2. Taxes

    Distribution Rules For Inherited Retirement Plan Assets

    If you've recently inherited a retirement plan, you must get to know the rules for distributing the funds.
  3. Retirement

    Combining Your Plan Assets? Not So Fast!

    You might reduce the costs of maintaining more than one account, but you could also be forfeiting tax benefits.
  4. Retirement

    3 Deadlines For Retirement Plan Beneficiaries

    To take full advantage of new RMD regulations, beneficiaries need to take action before important deadlines.
  5. Retirement

    Tough Times: Should You Dip Into Your Qualified Plan?

    401(k)s, pensions and profit-sharing plans can be a source of cash, but there are consequences to this option.
  6. Entrepreneurship

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  7. Retirement

    What is the difference between a fixed and variable annuity?

    Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks and advantages.
  8. Professionals

    Just Retired? No Better Time for a Second Career

    After working for decades and reaching retirement age, what's next? A second career, of course. Here's why and how.
  9. Retirement

    How does the Canada Pension Plan (CPP) work, and what asset mix does it hold?

    Learn the difference between a chartered financial analyst and the Canadian pension plan. Explore Canadian retirement options and how the CPP is invested.
  10. Professionals

    When Your Client's Retirement is Around the Corner

    With thousands of Baby Boomers reaching retirement age every day, here's a guide as to how financial advisors should approach and advise them.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center