What is meant by a 401K plan.

401 (k) Plan is a tax-preferred, defined contribution retirement account offered by many employers to their employees. It is named after a section of the US Internal Revenue Code. Employees can make contributions to their 401 (k) accounts through automatic payroll deduction, and their employers can offset some or all of those contributions. Investment income … Read more

What is meant by the 401(a) Plan?

401(a) Plan is an employer-funded retirement plan that provides dollar or percentage contributions from the employer, the employee, or both. The sponsoring employer determines eligibility and the compensation plan. The employee may withdraw funds from a 401 (a) plan through a transfer to another qualifying retirement plan, a lump sum, or an annuity.     … Read more

What is meant by a 12b-1 plan.

12B-1 plan is a plan structured by mutual fund companies for distributing funds through intermediaries. Plans 12B-1 provide an overview of the partnerships between distributors and intermediaries that help secure the sale of a fund. Sales commission plans and 12B-1 sales costs are the main components of a 12B-1 plan.       Realizing the … Read more

What is meant by a 12B-1 Fee.

12B-1 Fee is an annual marketing or distribution fee for a mutual fund. 12B-1 charges are considered an operating expense and, as such, are included in a fund’s expense ratio. It is generally between 0.25% and 0.75% (the maximum allowed) of the net assets of a fund. The commission takes its name from a section … Read more

What is meant by a 3-2-1 Buy-Down Mortgage?

3-2-1 Buy-Down Mortgage permits a borrower to decrease the interest rate over the course of the first three years of the loan by making a prepayment. In general, 3-2-1 buy-down loans are only available for first and second homes, while investment properties are ineligible. The 3-2-1 buy-down is also not available as part of an … Read more

What is meant by a 2-1 buy-down?

2-1 Buydown or Redemption, the term, indicates to a type of mortgage product with a set of two initial temporary starting interest rates that gradually increase until a permanent interest rate is reached. The initial rate cuts are paid either by the borrower to assist to qualify for a mortgage or by a home builder … Read more

What is meant by 501-C

  501(c) is a subsection of the US Internal Revenue Code (IRC). The subsection applies to non-profit organizations and tax law; in particular, it is indicated which non-profit organizations are exempt from federal income tax. The term 501(c) is often used to refer to organizations which have obtained legal status under this paragraph.     … Read more

How to trade with financial leverage.

  Understanding the effect of financial leverage in trading allows traders to make investments in the stock market that can earn them a lot more than their real deposit. Leverage can be considered as a credit that the broker offers during the trading period. This is a credit that begins when the trading position is … Read more

What is meant by financial leverage.

Financial leverage is a procedure for indebtedness to a banking institution for a company or an organization in order to finance their investments. The purpose of this loan is to make the investment profitable so that it can repay the amount of financing. An organization’s financial leverage is determined by relating its net debt to … Read more