Unemployment Compensation Amendment Of 1992


DEFINITION of 'Unemployment Compensation Amendment Of 1992'

A law in the United States that allows a terminated employee to take employer-sponsored retirement savings and place them into a retirement plan of their choice. The Unemployment Compensation Amendment of 1992 gives the option upon termination of directly transferring the funds into an individual retirement account (IRA) or qualified pension plan of the individual's choice. If the individual would like to receive the distribution directly, there will be a 20% withholding penalty paid to the Internal Revenue Service (IRS).

BREAKING DOWN 'Unemployment Compensation Amendment Of 1992'

The amendment in 1992 to the Unemployment Compensation Act allows the ex-employee to keep the money he or she has saved and invested while at the company. This applies to either defined contribution pension plans or defined benefit pension plans. Because of this, employees do not have to worry about losing money being matched by their employer towards their investment plan upon being terminated.

  1. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  2. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  3. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  4. Pension Shortfall

    A situation in which a company offering employees a defined benefit ...
  5. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  6. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
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  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  3. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  4. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  5. Can catch-up contributions be matched?

    Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>
  6. Are catch-up contributions included in actual deferral percentage (ADP) testing?

    Though the Internal Revenue Service (IRS) carefully scrutinizes the contributions of highly compensated employees (HCEs) ... Read Full Answer >>

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