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Investing for Retirement: 401(k), 403(b), and 457 Plans

Glossary

Account Balance: Your total value in the 401(k) plan, including contributions and earnings as well as any rollover amounts transferred into the plan.

After-Tax: Money you have already paid income tax on. Some 401(k) plans allow you to contribute after-tax money to the plan.

Annuity: An investment that pays out a fixed sum of money each year.

Asset Allocation: Diversifying your assets to minimize risk.

Beneficiary: The person(s) you have designated to receive benefits when you die.

Closed-End Fund: A fund you must hold until maturity or sell on an exchange.

Contributions: The amount of your pay that you elect to put into your 401(k) plan.

Direct Rollover: Rollovers to and from retirement plans where the money is directly transferred from plan to plan.

Diversification: The concept of reducing risk by investing your money in different types of investments.

Dollar-Cost Averaging: Investing fixed sums of money over a long time period to reduce the risk of buying investments at peak prices.

401(k) Loan: Money borrowed from your 401(k) account.

Hardship Withdrawal: Taking money out of your account if you have an immediate and heavy financial need. You will be required to pay ordinary income tax and possibly a 10% penalty on the withdrawal.

Individual Retirement Annuity: An annuity contract, issued by an insurance company, which meets specific tax requirements.

Investment Options: The different funds that you can choose from to invest your money.

Liquidity: The ease with which something can be converted to cash.

Lump-Sum Distribution: A distribution to you in one taxable year of all the money in your retirement plan.

Maturity: When an investment comes due.

Open-end Fund: A fund you can freely buy and sell from a bank, broker, or mutual fund company.

Portfolio: Refers to the makeup of all of your investments, both inside and outside your 401(k) plan.

Pre-tax Contribution: Money you have not paid tax on. Your taxable income is reduced by the amount of pre-tax money you contribute to your 401(k) plan.

Promissory Note: A signed promise to repay the amount of money you have borrowed from the plan.

Prospectus: A document giving detailed information about an investment to prospective buyers.

Qualified Retirement Plan: A plan that meets complex requirements of the Internal Revenue Code. Contributions to qualified plans and the resulting earnings are tax-deferred.

Risk Tolerance: A measure of your ability to risk principal for a higher return on your investments.

Rollover: A transfer of the money in your 401(k) account into another retirement plan or IRA.

Roth IRA: A type of Individual Retirement Account (IRA) that will allow you to save money on a tax-free basis, provided you meet the eligibility requirements and the holding period rules.

Tax-Deferred: Money that will be taxed at some point in the future.

Tax-Free: Money that will not be taxed.

Time Horizon: The amount of time between now and one of your financial goals.

Vesting: An employee's non-forfeitable right to benefits or monies earned. Pensions and profit-sharing plans have vesting schedules, typically defining how long an employee has to be an active participant in a plan before he or she is entitled to a portion or all of the benefits earned.

Withholding: The amount taken out of your distribution to be used to pay income taxes.

Disclaimers:

Not a Deposit.
Not FDIC-Insured.
Not Insured by any Government Agency.
Not Guaranteed by the Bank.
May go Down in Value.

Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA and SIPC. Infinex and BancorpSouth Bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.


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