403(b)
A tax-deferred retirement plan for employees of tax-exempt education and research organizations.

Accumulations
The value of all of an individual's participation in annuities or other funds until income payments begin.

Additional contributions
This refers to additional funds you may elect to contribute to your TIAA-CREF basic plan account.

Aftertax
Refers to net salary remaining after taxes are deducted from your paycheck.

Aggregation
All tax-deferred funds are added together in calculating the amounts that can be tax deferred.

Annuity
A contract by which an insurance company agrees to make regular payments to someone for life or for a fixed period of time.

Basic Retirement Plan
The primary retirement plan for UM faculty and staff members, which provides a matching contribution of 10% if the faculty or staff members puts in 5% of eligible gross salary.

Bond fund
A fund that holds mainly municipal, cooperate, and/or government bonds.

Cash withdrawal
A contractual provision that permits participants to withdraw some or all of an accumulation from their account.

Compound interest
Interest credited daily, monthly, quarterly, semiannually, or annually on both principal and previously credited interest.

Compulsory participants
Employees who must enroll in University of Michigan retirement plan because they have met all of the following requirements: (1) are age 35 or older, (2) have completed two years of employment in a job/career family that is eligible to participate in the basic retirement plan, and (3) have a 100% appointment (faculty or staff).

Contribution
Investments made to a retirement plan through payroll deduction.

CREF
College Retirement Equities Fund. In 1952, CREF was established as a companion nonprofit organization to TIAA to provide the world's first variable annuity. CREF offers several investment accounts including equity funds, a balanced fund, a bond market account and a money market account.

Deferred annuity
An annuity not yet paying income because it is still in the accumulating or preretirement stage, which means money is accumulating on a tax-deferred basis.

Defined benefit plan
A retirement plan that usually provides a benefit based on a percentage of salary times years of service.

Defined contribution plan
A retirement plan that specifies a rate of employer and/or costs usually defined as a percentage of salary. The amount of income a participant receives in retirement will depend on several factors, including salary level, duration of contributions, investment earnings, and age at retirement.

Direct transfer
To move some or all of an accumulation of retirement funds from one University-approved investment company to another. Also referred to as a "transfer."

Distribution
The act of withdrawing retirement funds from your accounts.

Diversification
To spread out investments so they are in more than one kind of investment vehicle, such as stocks, bonds, money markets, etc.

Earnings
The increase in your account value due to the capital appreciation of your investments.

ERISA
The Employee Retirement Income Security Act of 1974. The UM Defined Contribution Retirement Plan is not subject to ERISA.

Fidelity
An investment company that manages many investment funds.

Front-end load
A sales charge or commission paid for an investment at the time of purchase.

Global Fund
An investment fund with holdings in worldwide (U.S. and foreign) investments, mainly common stocks. Global bond funds, with holdings in international bonds, are also available.

Gross Income
An individual's income before taxes, benefit costs, and other expenses are deducted.

Growth stocks
Stocks believed to have a strong potential for better-than-average capital appreciation. Because of expected higher earnings and faster expansion of the underlying company, growth stocks almost always involve greater risk.

Income options
Choices for receiving retirement income from a retirement plan or annuity.

Individual Retirement Account (IRA)
A savings device that permits individuals to set aside up to $3,000 per year, with earnings tax-deferred until withdrawals begin. Your income level and eligibility for another qualified retirement plan affect whether or not any part of your original contribution is tax deductible.

IRC
Internal Revenue Code

IRS
Internal Revenue Service

Lifetime annuity
An annuity contract designed to provide a lifetime income for the participant (contract holder).

Lump-sum distribution
The one-time payment of part or all of the entire value of a profit-sharing plan, pension plan or other investment.

Mutual fund
A fund which pools contributions from individuals and other sources, then uses them to buy stocks, bonds, or other securities chosen to meet specific criteria and goals.

Net income
An individual's income after taxes, benefit costs, and other expenses are deducted.

Non-temporary staff
Regular, active staff

November letter
A letter sent to SRA participants in November of each year indicating their allowable limit for making additional or supplemental contributions for the upcoming year.

Participant
An individual who is having or has had contributions made to a retirement or tax-deferred annuity plan.

Payout options
The way in which you want to receive your University of Michigan retirement funds (annuity, rollover, transfer, cash withdrawal, etc.).

Pension plan
A plan set up by a corporation, government, institution, labor union or other group to pay retirement benefits to employees.

Pretax investment
Certain types of tax sheltered investments, such as 403(b) annuities and Keogh Plans, where it is possible to invest income before it has been subjected to taxes.

Prospectus
A document outlining the terms of an investment offering.

QDRO
A Qualified Domestic Relations Order is a court order resulting from a divorce decree which specifies participation in or division of retirement plan benefits.

Real estate fund
An investment fund that seeks a favorable rate of return by investing in a portfolio of real estate.

Reduced Benefit Option (RBO)
If you are a compulsory retirement plan participant, you may elect this option. You contribute nothing to the plan, and the University's contribution is 5% of your eligible gross salary.

Regular staff
Non-temporary, active staff.

Retiree
Someone who has met the UM age and years of service requirements. See Standard Practice Guide 201.83.

Retirement
When you have met the age and years of service requirements and have retired from the University. See Standard Practice Guide 201.83.

Retirement planning
A comprehensive design for managing finances and meeting living standards after an individual stops working.

Rollover
To move retirement funds from the UM retirement plan to another plan of the same kind or to an IRA, without incurring a tax liability.

Single-life annuity
An annuity that provides income benefits for one person only.

SSWB
Social Security Wage Base ($87,000 in 2003).

Stock fund
An investment fund that seeks a favorable rate of return through investments in the stocks of various corporations.

Supplemental contributions
Supplemental contributions are funds that contributed to a Supplemental Retirement Account (SRA), which is a separate account available from TIAA-CREF or Fidelity that has slightly different provisions than basic plan accounts. Additional contributions may also be made to a basic plan TIAA-CREF account.

Supplemental Instructional Staff
Includes adjunct professors, visiting professors, visiting lecturers, clinical associate professors, clinical instructors, clinical lecturers.

Supplemental Retirement Account (SRA)
A separate account available through TIAA-CREF or Fidelity for accumulating contributions beyond 5% and 10%. SRAs have slightly different provisions than the basic plan accounts.

Systematic withdrawal
A cash withdrawal option where participants can tailor payments to their specific needs while also electing to stop, restart and change their payment schedules and amounts whenever they choose.

Tax-defer
Postpone taxes due on an amount invested and/or its earnings until they are withdrawn from the investment.

Terminated staff
Faculty and staff who have left their employment at the University to retire or to take a position elsewhere.

TIAA
Teacher's Insurance and Annuity Association. A nonprofit organization established in 1918 by the Carnegie Foundation for the Advancement of Teaching to provide retirement benefits for colleges, universities, and other nonprofit organizations.

Transfer
To move some or all of an accumulation, within or between funds, from CREF to TIAA or Fidelity, or among CREF, TIAA and Fidelity variable accounts. Transfers can also be made from the TIAA Traditional Annuity to the TIAA-CREF variable accounts. Also referred to as "direct transfer."

Triggering event
An exception to the 10% IRS withdrawal penalty tax (such as separation from service, death, disability, or financial hardship).

Vesting
An employee's right to receive retirement benefits whether or not the individual remains with the employer.