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In the United States, a 401(k) plan is the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code. Under the plan, retirement savings contributions are provided by an employer, deducted from the employee's paycheck before taxation, and limited to a maximum pre-tax annual contribution of $19,000.
An individual retirement account (IRA) is a form of "individual retirement plan", provided by many financial institutions, that provides tax advantages for retirement savings in the United States. An individual retirement account is a type of "individual retirement arrangement" as described in IRS Publication 590, individual retirement arrangements (IRAs). The term IRA, used to describe both individual retirement accounts and the broader category of individual retirement arrangements, encompasses an individual retirement account; a trust or custodial account set up for the exclusive benefit of taxpayers or their beneficiaries; and an individual retirement annuity, by which the taxpayers purchase an annuity contract or an endowment contract from a life insurance company.
A Registered Retirement Savings Plan (RRSP), or Retirement Savings Plan (RSP), is a type of Canadian account for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts. They were introduced in 1957 to promote savings for retirement by employees and self-employed people.
A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary. In 2017, K-12 public, private, and religious school tuition were included as qualified expenses for 529 plans along with post-secondary education costs with passage of the Tax Cuts and Jobs Act.
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year to year if they are not spent. HSAs are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA) that are an alternate tax-deductible source of funds paired with either high-deductible health plans or standard health plans.
The Thrift Savings Plan (TSP) is a defined contribution plan for United States civil service employees and retirees as well as for members of the uniformed services. As of August 31, 2017, there were more than 5 million participants, and more than $500 billion in assets under management.
The paradox of thrift is a paradox of economics. The paradox states that an increase in autonomous saving leads to a decrease in aggregate demand and thus a decrease in gross output which will in turn lower total saving. The paradox is, narrowly speaking, that total saving may fall because of individuals' attempts to increase their saving, and, broadly speaking, that increase in saving may be harmful to an economy. Both the narrow and broad claims are paradoxical within the assumption underlying the fallacy of composition, namely that what is true of the parts must be true of the whole. The narrow claim transparently contradicts this assumption, and the broad one does so by implication, because while individual thrift is generally averred to be good for the economy, the paradox of thrift holds that collective thrift may be bad for the economy.
The Roth 401(k) is a type of retirement savings plan. It was authorized by the United States Congress under the Internal Revenue Code, section 402A, and represents a unique combination of features of the Roth IRA and a traditional 401(k) plan. Since January 1, 2006, U.S. employers have been allowed to amend their 401(k) plan document to allow employees to elect Roth IRA type tax treatment for a portion or all of their retirement plan contributions. The same change in law allowed Roth IRA type contributions to 403(b) retirement plans. The Roth retirement plan provision was enacted as a provision of the Economic Growth and Tax Relief Reconciliation Act of 2001.
Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:
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Kiva Microfunds is a 501(c)(3) non-profit organization that allows people to lend money via the Internet to low-income entrepreneurs and students in over 80 countries. Kiva's mission is "to connect people through lending to alleviate poverty."
An Individual Development Account (IDA) is an asset building tool designed to enable low-income families to save towards a targeted amount usually used for building assets in the form of home ownership, post-secondary education and small business ownership. In principle IDAs work as matched savings accounts that supplement the savings of low-income households with matching funds drawn from a variety of private and public sources.
Asset poverty is an economic and social condition that is more persistent and prevalent than income poverty. It is a household’s inability to access wealth resources that are sufficient to provide for basic needs for a period of three months. Basic needs refer to the minimum standards for consumption and acceptable needs. Wealth resources consist of home ownership, other real estate, net value of farm and business assets, stocks, checking and savings accounts, and other savings. Wealth is measured in three forms: net worth, net worth minus home equity, and liquid assets. Net worth consists of all the aspects mentioned above. Net worth minus home equity is the same except it does not include home ownership in asset calculations. Liquid assets are resources that are readily available such as cash, checking and savings accounts, stocks, and other sources of savings. There are two types of assets: tangible and intangible. Tangible assets most closely resemble liquid assets in that they include stocks, bonds, property, natural resources, and hard assets not in the form of real estate. Intangible assets are simply the access to credit, social capital, cultural capital, political capital, and human capital.
The Tax-Free Savings Account is an account available in Canada that provides tax benefits for saving. Investment income, including capital gains and dividends, earned in a TFSA is not taxed in most cases, even when withdrawn. Contributions to a TFSA are not deductible for income tax purposes, unlike contributions to a Registered Retirement Savings Plan (RRSP).
Saving for Education, Entrepreneurship, and Downpayment (SEED) Policy and Practice Initiative is a long-term savings and investment account policy and practice endeavor that develops, tests and impels matched savings accounts and financial education for children and youth. The SEED accounts are installed at birth with an initial deposit of $1,000, and accumulates over the span of a lifetime. All the money will be invested in children’s savings accounts for future purposes.
A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.
Peter Nares is a Canadian social entrepreneur. Born in Vancouver, British Columbia, in 1950, Nares founded the not-for-profit organization Social and Enterprise Development Innovations (SEDI)] in 1986. The organization is dedicated to helping low-income people gain financial independence through financial literacy, asset building and entrepreneurship. Nares is the current executive director of SEDI.
The Corporation for Enterprise Development (CFED), now known as Prosperity Now , is a national nonprofit based in Washington, DC dedicated to expanding economic opportunity for low-income families and communities in the United States. CFED uses an approach grounded in community practice, public policy and private markets. CFED publishes research, partners with local practitioners to carry out demonstration projects, and engages in policy advocacy work at the local, state and national levels. The organization works domestically with satellite offices in San Francisco, California, and Durham, North Carolina.
A Registered Disability Savings Plan (RDSP) is a Government of Canada program designed to enable individuals with disabilities, with assistance from family and friends to save for their future financial security. The Government of Canada assists people to save with the Canada Disability Savings Program, consisting of the Canada Disability Savings Grant and Canada Disability Savings Bond. The Canada Disability Savings Grant matches personal contributions. The Canada Disability Savings Bond provides funding to RDSPs of people with low and moderate incomes.
Assets for Independence (AFI) is a federal program that distributes discretionary grants to help the impoverished achieve one of three goals: (1) homeownership; (2) business ownership; and (3) post-secondary education. AFI was created by the Assets for Independence Act.
References
- ↑ "American Dream Demonstration Overview". Corporation for Enterprise Development. Archived from the original on 2004-08-11. Retrieved 2008-08-15.
- ↑ "American Dream Demonstration Individual Families Who Saves?". Corporation for Enterprise Development.[ permanent dead link ]
- ↑ "American Dream Demonstration Individual Families How Savings are Used". Corporation for Enterprise Development. Archived from the original on 2004-08-11. Retrieved 2008-08-15.
- ↑ "American Dream Demonstration Private Partners Bank Perspective". Corporation for Enterprise Development. Archived from the original on 2003-12-14. Retrieved 2008-08-15.
- 1 2 "American Dream Demonstration Private Partners Data on Savings and Withdrawal". Corporation for Enterprise Development. Archived from the original on 2004-08-11. Retrieved 2008-08-15.
- ↑ "ADD – What we Learned". Corporation for Enterprise Development. Archived from the original on 2006-02-12. Retrieved 2008-08-15.