401(k), IRA, pension plans, retirement strategies, Social Security, and retirement income planning.
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Foundation terms you need to know first (10 terms)
Early retirement is the goal of achieving financial independence, allowing an individual to stop working for income before the traditional retirement age, often supported by passive income streams like those from real estate investments.
An Individual Retirement Account (IRA) is a tax-advantaged savings plan designed to help individuals save for retirement, offering benefits like tax-deferred growth or tax-free withdrawals.
Wealth accumulation is the process of increasing one's net worth over time through consistent saving, strategic investing, and growing assets, often with a focus on achieving long-term financial security and freedom.
Financial planning is the comprehensive process of managing your money to achieve personal and investment goals, involving budgeting, saving, investing, and risk management.
A retirement portfolio is a collection of investments specifically designed to generate income and growth to support an individual financially during their retirement years.
Complex strategies and professional concepts (4 terms)
A Self-Directed IRA (SDIRA) is a specialized retirement account allowing investors to hold alternative assets like real estate, private equity, and precious metals, offering enhanced control but requiring strict adherence to complex IRS regulations to avoid prohibited transactions and Unrelated Business Income Tax (UBIT).
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to protect individuals in these plans.
A specialized retirement investment structure where a Self-Directed IRA owns an LLC, granting the account holder "checkbook control" to directly invest in alternative assets like real estate, while maintaining tax-advantaged growth.
A 401(k) loan allows participants to borrow a portion of their vested retirement savings, repaying the principal and interest back into their own account, often used by real estate investors for short-term capital needs like down payments or rehabilitation.
A 401(k) plan is an employer-sponsored retirement savings account that allows employees to contribute a portion of their salary on a tax-advantaged basis, often with employer matching contributions, to invest for their future.
A 401(k) withdrawal is the act of taking funds from a 401(k) retirement account, often incurring ordinary income taxes and a 10% early withdrawal penalty if done before age 59½ without qualifying for an exception.
After-tax contributions are funds added to a retirement account, such as a 401(k) or IRA, that have already been taxed, offering a pathway for tax-free growth and withdrawals in retirement.
Annuity is a financial contract from an insurance company providing a fixed or variable income stream over time, often used for retirement planning or structured settlements.
A Cash Balance Plan is a type of defined benefit retirement plan that combines features of both traditional defined benefit and defined contribution plans, offering high contribution limits and significant tax deferral opportunities.
A Defined Benefit Plan is a type of employer-sponsored retirement plan that guarantees a specific payout at retirement, typically based on salary and years of service. For real estate investors, self-directed versions allow for significant tax-advantaged contributions to invest in real estate.
The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to protect individuals in these plans.
Early retirement is the goal of achieving financial independence, allowing an individual to stop working for income before the traditional retirement age, often supported by passive income streams like those from real estate investments.
Financial planning is the comprehensive process of managing your money to achieve personal and investment goals, involving budgeting, saving, investing, and risk management.
IRA real estate investing involves using a self-directed Individual Retirement Account (SDIRA) to purchase and hold real estate assets, allowing investors to defer or avoid taxes on investment gains.
An IRA rollover is the process of moving funds from one retirement account to another, typically from an employer-sponsored plan to an Individual Retirement Account (IRA), without incurring immediate taxes or penalties.
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