Defined terms for the annuity market and lifetime income landscape.
A plan document is the written legal instrument that establishes and governs an employer-sponsored retirement plan, specifying the plan's terms — eligibility, contributions, vesting, distributions, and administration — as required by ERISA and the Internal Revenue Code.
The plan sponsor is the employer, employee organization, or committee that establishes or maintains an ERISA-covered employee benefit plan, and that ordinarily holds the authority to amend or terminate the plan.
Portability of lifetime income options is the participant-facing right — addressed by the SECURE Act — to preserve or transfer a lifetime income arrangement when a plan sponsor discontinues it or the participant separates from the plan, avoiding forced surrender below actuarial value.
A profit sharing plan is a defined contribution plan under which the employer makes discretionary contributions to participant accounts on a formula the employer establishes, historically funded from company profits though no actual profits are required under current tax law.
A prohibited transaction is a category of dealings between an ERISA-covered plan and a specified list of related parties that ERISA and the Internal Revenue Code bar as a matter of bright-line rule, regardless of whether the transaction is otherwise fair or beneficial to the plan.
