NDSU Extension Service - Ramsey County

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A through G

A through G

            Most of the terms used when describing finances and financial planning are not ones that we use in everyday conversation – so when it comes time to plan a future for your hard-earned dollars, the discussion can be confusing. Starting with A, a few financial terms are explained below.

Adjusted Gross Income - Gross income less allowable adjustments. It is the income on which an individual is taxed by the federal government

Beneficiary –An individual, institution, trustee, or estate receiving benefits under a will, insurance policy, retirement plan, annuity, trust, or other contract

Consumer Price Index - A special average of many prices of goods and services that people often buy; the CPI is calculated by the U.S. Department of Commerce.

Defined Contribution Pension Plan - A type of pension to which a worker and/or worker’s employer contributes to an account in the worker’s name and the amount received at retirement is based on the amount contributed and investment gains and losses. There is no formula to calculate future benefits. Defined contribution plans are used increasingly by employers instead of defined benefit plans

Earned Income Tax Credit - The Earned Income Tax Credit (EITC) is a special tax benefit for working people who earn low or moderate incomes. Taxpayers who qualify and claim the credit could pay less federal income tax, pay no income tax, or even get a tax refund. To qualify, a taxpayer must meet certain rules and file a tax return, even if the claimant does not owe any income tax or did not earn enough money to require filing a return.

Fixed Annuity -An investment vehicle, often used for retirement accounts, that guarantees principal and a specified interest rate. Fixed annuity earnings grow tax-deferred until withdrawal

Guaranteed Investment Contract (GIC) - Fixed-income investments, offered in many tax-deferred employer retirement plans that guarantee a specific rate of return for a specific time period.

 

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