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. Asset

    1. A resource with economic value that an individual, corporation ...
  2. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
  3. Qualified Retirement Plan

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

    A type of retirement plan, usually tax exempt, wherein an employer ...
  5. Distribution

    1. When trading volume is higher than that of the previous day ...
  6. Employer-Sponsored Plan

    A type of benefit plan that an employer offers for the benefit ...
Related Articles
  1. Business Owners: Rules For Qualified ...
    Entrepreneurship

    Business Owners: Rules For Qualified ...

  2. Distribution Rules For Inherited Retirement ...
    Taxes

    Distribution Rules For Inherited Retirement ...

  3. 3 Deadlines For Retirement Plan Beneficiaries
    Retirement

    3 Deadlines For Retirement Plan Beneficiaries

  4. Combining Your Plan Assets? Not So Fast!
    Retirement

    Combining Your Plan Assets? Not So Fast!

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center