Salary

 

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Salary

Regular wages and benefits an employee receives from an employer.



Salary

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Salary Reduction Simplified Employee Pension Plan (SARSEP)

Salary Reduction Simplified Employee Pension Plan (SARSEP)

A low-cost, no-frills version of a 401(k) employee savings plan available to companies with 25 or fewer employees. It allows employees to make pretax contributions to their IRAs through salary reduction each year. The Small Business Job Protection Act of 1996 ../../finance-glossary/d SARSEPs with SIMPLE (Savings Incentive Match Plan for Employees) plans. Existing SARSEPs were allowed to add new participants, but new plans could not be formed after December 31, 1996.


Final salary

Final salary

The basis of determining a person's pension entitlement in a final salary scheme and which normally refers to an occupational pension. Final salary is defined as either:the total emoluments in a year, in any of the five years immediately preceding retirement, orthe average of total emoluments for periods of three consecutive years or more ending within ten years of retirement.Directors who own 20% or more of a company's share capital must define their final salary according to 2. above.For people joining a scheme on or after 1st June 1989 (or 14th March 1989 if the scheme was new at that time) an earnings cap will apply which limits the final salary to be used for calculating benefits.


Final salary scheme (defined benefit scheme)

Final salary scheme (defined benefit scheme)

A pension scheme in which an employee's pension is based on number of years of service and final salary with each employer. In this type of scheme employees are typically provided with 1/60 of final salary for each year of service up to a maximum of 40/60 that is, two thirds of final salary. At retirement a tax free lump sum may be taken at the expense of a reduced pension.


Salary reduction plan

Salary reduction plan

A plan allowing employees to contribute pre-tax income to a tax-deferred retirement plan.


Salary reduction plan

Salary reduction plan

A tax deferred retirement plan which provides for an employee to have a certain amount of gross salary withheld and invested in a choice of stocks and bonds. Contributions and fund growth are free of tax until withdrawal.


Further Suggestions

Salary freeze


 
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