Forty-five Year Rule
Definition of "Forty-five year rule"
One of three ways vesting must occur in a pension plan under the employee retirement income security act of 1974 (ERISA). An employee is entitled to 50% of his or her benefits after 10 years of employment, or when the total years of service (at least 5) and the employee's age equal 45, whichever is the earlier achieved. After that, the employee is credited with 10% for each year of service for the next 5 years, whereupon 100% vesting is achieved. Under the TAX REFORM ACT OF 1986, this vesting rule will no longer be in effect for plan years after December 31,1988.
Popular Insurance Terms
Required minimum amounts of coverage that an insurance company will underwrite. For example, for auto liability coverage the minimum that many companies will write is $25,000. Most ...
Market in which sellers dominate trading and force financial asset prices down. ...
Single insurance policy for only one kind of property at only one location of an insured. For example, property insurance on a rare piano in the insured's home would cover only that piano, ...
Mortality table whose statistics have been adjusted to show expected mortality experience. ...
Plan for excess layer (s) of insurance coverage over the primary coverage, for example, if a corporation buys $8 million as excess above a $2 million self insurance retention level. Excess ...
Arrangement under which the insured pays a fixed premium to the insurance company in exchange for the total transfer of the risk to that company. ...
Act that makes it mandatory for employees with spouses to be in receipt of retirement income from a pension plan in the form of a joint life and survivor ship annuity, unless the employee's ...
Gradual or accelerated deterioration of the body resulting from a disease such as cancer. ...
Income paid for a specified number of years from an annuity. ...
Have a question or comment?
We're here to help.