|
|
Forward averaging |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Forward averagingA method of calculating taxes on a lump-sum distribution from a qualified retirement plan that enables the tax payer to pay less than the current tax rate.Forward averaging Similar MatchesPound cost averagingPound cost averagingIn the UK, the regular investing of fixed amounts over regular periods, typically monthly, in order to accumulate holdings in securities such as shares, unit trusts and investment trusts.When for example a unit trust price or investment trust price has fallen then more units or shares can be purchased for that month. Similarly when the price rises then fewer units or shares can be purchased.Over a period of a few years, the average price paid will be lower than the average share price for that period since more shares are bought at the lower price and fewer at the higher price. Income AveragingIncome AveragingA method of figuring income tax by paying tax on the average income per year for the past five years. For example: A, a real estate salesperson, earns $10,000 taxable income for 4 years. In the fifth year, A sells a shopping center and earns $100,000 taxable income. A-could take the total income for 5 years ($140,000), divide by 5 ($28,000), and pay tax on $28,000 for the past 5 years, less what A has already paid. Dollar cost averagingDollar cost averagingIn the US, a plan which enables investors to accumulate shares in stock or a mutual fund by purchasing on a regular basis (for example monthly) with a fixed dollar amount. When the price is low, more shares will be purchased and fewer when the price is high. Also known as constant dollar plan. Known as pound cost averaging in the UK. AveragingAveragingSee: Constant dollar plan. Dollar cost averagingDollar cost averagingSee: Constant dollar plan Further Suggestionsaveraging |
|
|
|