Triggering Event

AAA

DEFINITION of 'Triggering Event'

1. A tangible or intangible barrier or occurrence that, once breached or met, causes another event to occur. Triggering events are written into contracts to prevent or ensure that after a given occurrence, the terms of the original agreement are abandoned or changed to suit the party that included the triggering event in the agreement.

2. A certain milestone or event that a participant in a qualified plan must experience in order to be eligible to receive a distribution from a qualified plan.

INVESTOPEDIA EXPLAINS 'Triggering Event'

1. It is common for banks to issue debt at a given interest rate on certain terms. For example, one of the bank's terms could be that the borrowing party does not incur any more debt for the term of the loan. Should the borrower incur more debt - the triggering event - the bank may foreclose on the loan or increase the original rate of interest accordingly.

2. Triggering events are typically characterized by the attainment of retirement age (as defined under the plan), termination of employment, termination of the plan, the participant becoming disabled (as defined under the plan) or the death of the participant.

In some cases, in-service withdrawals may be permitted within the plan, allowing for tax and penalty free distributions before a triggering event occurs.

RELATED TERMS
  1. In-Service Withdrawal

    A withdrawal made from a qualified plan account before the holder ...
  2. IRA Adoption Agreement And Plan ...

    A contract between the owner of an individual retirement account ...
  3. Roth IRA Conversion

    A reportable movement of assets from a Traditional, SEP or SIMPLE ...
  4. Ordering Rules

    The order in which Roth IRA assets are distributed. Assets are ...
  5. Qualified Distribution

    Distributions made from a Roth IRA that are tax and penalty free. ...
  6. Non-Qualified Distribution

    1) A distribution from a Roth IRA that occurs before the Roth ...
Related Articles
  1. Preparing To Tap Into Retirement Income
    Retirement

    Preparing To Tap Into Retirement Income

  2. 9 Penalty-Free IRA Withdrawals
    Taxes

    9 Penalty-Free IRA Withdrawals

  3. Can I roll my 401(k) and/or IRA funds ...
    Options & Futures

    Can I roll my 401(k) and/or IRA funds ...

  4. I will be receiving monies from a QDRO ...
    Retirement

    I will be receiving monies from a QDRO ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center