Glossary

A 401(k) plan is a defined contribution plan established under Internal Revenue Code Section 401(k) that permits an employee to elect to have a portion of compensation contributed to the plan on a pre-tax or Roth basis, with employer contributions optional.

A 403(b) plan is a defined contribution plan under Internal Revenue Code Section 403(b) available to employees of public schools and certain tax-exempt organizations, permitting pre-tax or Roth salary deferrals into annuity contracts or custodial mutual fund accounts.

A 457(b) plan is a nonqualified deferred compensation plan established under Internal Revenue Code Section 457(b) by a state or local government employer or a tax-exempt organization, permitting eligible employees to defer compensation on a pre-tax or Roth basis into the plan.

Automatic enrollment is a defined contribution plan design feature that enrolls eligible employees in the plan by default at a specified contribution rate, with the employee retaining the right to opt out or change the rate at any time.

Automatic escalation is a defined contribution plan design feature that increases a participant's contribution rate on a scheduled basis — typically annually by a stated percentage — with the participant retaining the right to change the schedule or opt out at any time.