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. Life Annuity

    An insurance product that features a predetermined periodic payout ...
  4. Ordering Rules

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

    A type of individual retirement account that allows a working ...
  6. Roth IRA Conversion

    A reportable movement of assets from a Traditional, SEP or SIMPLE ...
RELATED FAQS
  1. I will be receiving monies from a QDRO executed pursuant to my divorce. I would like ...

    There are several issues to consider: The early distribution penalty - Assets distributed from a qualified plan in accordance ... Read Full Answer >>
  2. Can I roll my 401(k) and/or IRA funds into a more liquid investment fund without ...

    Choosing your retirement plan investments requires the assistance of an expert who is able to analyze your options and to ... Read Full Answer >>
  3. For what types of financial instruments would I want to calculate the present value ...

    Because the present value of an annuity formula relies on a consistent interest rate and identical payments for a set period ... Read Full Answer >>
  4. What exact information is included in the interest rate when calculating the present ...

    When calculating the present value of an annuity, the interest rate percentage is the rate at which future payments are discounted ... Read Full Answer >>
  5. What is the difference between the present value of an annuity and the future value ...

    The present value of an annuity represents the sum that must be invested now to guarantee a desired payment amount in the ... Read Full Answer >>
  6. How do gains from my 401(k) figure into my taxable income?

    Capital gains from a 401(k) account figure into taxable income in that capital gains are taxed at the ordinary income rate ... Read Full Answer >>
Related Articles
  1. Retirement

    Preparing To Tap Into Retirement Income

    You need to plan ahead to ensure a long and happy future away from the daily grind.
  2. Taxes

    9 Penalty-Free IRA Withdrawals

    If you need to take early distributions, find out which exemptions allow you to avoid expensive consequences.
  3. Retirement

    How to Convert a Roth IRA to a Traditional IRA

    If the technicalities of converting a Roth IRA to a traditional IRA seem dauntingly complex, here are a few simple tips to guide you through the process.
  4. Investing

    Can You Be Sued for Negative Comments Online?

    It's important to understand the basics of libel law so you can avoid posting statements that might result in a lawsuit.
  5. Retirement

    5 Reasons to Convert a Roth To a Traditional IRA

    Here's a quintet of cases when the traditional IRA trumps the Roth version.
  6. Personal Finance

    Get Your House In Order By Choosing a Financial Advisor

    As the old saying goes, people don't plan to fail, they just fail to plan.
  7. Retirement

    Can You Retire in Brazil with $200,000 of Savings?

    Brazil has a lot to offer the expat. The cost of living and healthcare are cheaper, and the pace is unhurried. But educate yourself about the taxes.
  8. Professionals

    Can Young Workers Rely on Social Security?

    Young savers have time on their hands to take advantage of many investment strategies, and they should because Social Security alone might not be enough.
  9. Professionals

    Target-Date vs. Index Funds: Is One Better?

    Target-date and index funds are difficult to compare because they differ in both structure and objective, though investors can compare two specific funds.
  10. Professionals

    Is a Google Robo-Advisor on the Horizon?

    It's possible that Google is looking to get into the robo-advisor business, either as a new venture or as a way to provide more benefits to employees.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!