retirement account
Definition
Noun: 1. A specialized savings or investment plan designed to hold money intended for use during a person's retirement years. These accounts typically offer tax advantages, such as tax-deferred growth or tax-free withdrawals, under specific conditions set by government regulations. The primary purpose is to encourage and facilitate long-term saving for life after one stops working.
Usage
A "retirement account" is a formal financial product. You open, contribute to, manage, and eventually withdraw from a retirement account. The term is often modified by the specific type of plan (e.g., an employer-sponsored retirement account).
Examples
- It's important to start contributing to a retirement account early in your career to benefit from compound growth.
- Her company offers a matching contribution to the employee retirement account.
- Withdrawing funds from a retirement account before age 59½ may result in a penalty.
- He consolidated his savings into a single individual retirement account (IRA).
Advanced Usage
- Qualified retirement account: A specific legal term for accounts that meet the requirements of the Internal Revenue Code (IRC) for favorable tax treatment.
- Retirement account beneficiary: The person or entity designated to receive the assets in the account upon the account holder's death.
Variants and Related Words
- Individual Retirement Account (IRA): A common type of retirement account that an individual can establish independently of an employer.
- 401(k) / 403(b): Types of employer-sponsored retirement accounts common in the United States.
- Pension plan: A different type of retirement benefit where an employer promises a specified payment upon retirement, not typically referred to as an "account" in the same way.
- Superannuation account (common in Australia/NZ): The equivalent term for a retirement savings account.
Synonyms
- Pension account (context-dependent)
- Retirement savings plan
- Tax-advantaged savings account (broader term, but often used in this context)
Related Phrases
- Retirement account rollover: The process of moving funds from one qualified retirement account to another without incurring taxes or penalties.
- Retirement account distribution: A withdrawal or payout of funds from the account.
Noun
-
a plan for setting aside money to be spent after retirement
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