R

“R”

Rabbi trust
A way of setting aside funds for nonqualified deferred compensation by holding them in trust for the employee to whom the compensation is promised. A rabbi trust qualifies as an irrevocable grantor trust under the Internal Revenue Code. Money in a rabbi trust is inaccessible to the employer but is not protected from the employer’s creditors.
R&C
See reasonable and customary.
Rated policy
An insurance policy issued at a higher-than-standard premium rate to cover the extra risk in cases in which, for example, an insured individual has impaired health or is engaged in a hazardous occupation. Sometimes called an extra risk policy.
Rating
The basis for an additional charge to the standard premium because of greater-than-normal risks.
REA
See Retirement Equity Act of 1984.
Reasonable and customary (R&C)
A charge for health care that is consistent with the going rate or charge in a certain geographical area for identical or similar services.
Recognition programs
Employer acknowledgments of employees’ achievements in such areas as length of service, customer service, attendance, money-saving suggestions, quality, safety, and productivity.
Recurring clause
A provision in some health insurance policies that specifies a period during which the recurrence of a condition is considered a continuation of a prior period of disability or hospital confinement.
Reduced paid-up insurance
This is provided when the cash value of a life insurance policy on which the owner has discontinued premiums is used to continue the original insurance plan for a reduced amount, without further payment of premiums. Reduced paid-up insurance may be provided as a nonforfeiture option.
Regulations
Rules issued by a government agency charged with interpreting a law.
Reimbursement account
A flexible spending account.
Reinsurance
The acceptance by one or more insurers, called reinsurers, of a portion of the risk underwritten by another insurer that has contracted for the entire coverage.
Religious leave.
Program offered by employers that permit employees to take time off for religious observance.
Renewable term insurance
Term insurance that can be renewed at the end of the term at the option of the policyholder and without evidence of insurability for a limited number of successive terms. The rate increase at each renewal as the age of the insured person increases.
Reportable event
An event that must be reported to the PBGC (usually within thirty days following its occurrence) unless reporting is expressly waived by the PBGC. The notice is required under ERISA to allow the PBGC sufficient time to protect the benefits of the participants and the beneficiaries. A reportable event includes such occurrences as (1) loss of qualification for tax purposes; (2) any amendment decreasing benefits; (3) a decrease in the number of participants to less than 80 percent of participation as of the beginning of the plan year; (4) an Internal Revenue Service determination letter stating that the plan has been completely or partially terminated; (5) failure to meet minimum-funding standards; (6) inability to pay benefits when due; (7) any distribution to “a substantial owner”; (8) filing an actuarial statement with the Internal Revenue Service preliminary to a plan merger, consolidation, or transfer of assets or the granting of an alternative method of ERISA compliance by the Department of Labor; or (9) any other event as determined by the PBGC, including bankruptcy, insolvency, liquidation, dissolution, or a change in the plan sponsor of a single-employer plan with unfunded, nonforfeitable benefits and 100 or more participants.
Required distributions
Distributions from a deferred compensation plan (including an IRA) that must begin shortly after an individual reaches age 70 1/2. The basic rationale is to increase the likelihood that an employee will pay income tax on some portion of pretax savings before death.
Reserve
The amount required to be carried as a liability on the financial statement of an insurer to provide for future commitments under policies outstanding.
Residual disability benefits
A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability as opposed to the inability to work full-time,
Restricted performance shares
A restricted stock plan in which vesting of the stock requires both continued service and achievement of performance goals.
Restricted stock plan
A stock plan in which stock is given or sold at a discount to an executive who is restricted from selling or transferring it for a specified period, usually four to five years. The executive receives dividends but usually must forfeit the stock if the executive terminates employment before the restriction period ends.
Retention
The part of an insurance premium that the insurer keeps to repay it for its expenses and risk and to provide it with a profit.
Retirement Equity Act of 1984 (REA)
A federal law modifying ERISA that expands the opportunities for women to earn private pensions. Many of ERISA’s protections for participants’ spouses originated with this law.
Return-to-work programs
Efforts to reduce workers’ compensation and other disability benefits costs by easing a disabled worker’s return to the work force.
Revenue Procedure (Rev. Proc.)
A procedure issued by the Internal Revenue Service that is somewhat similar to a revenue ruling but deals with procedural matters or details specific requirements to be followed with respect to various interactions with the Internal Revenue Service. Sometimes contains guidelines for the Internal Revenue Service to follow in the handling of certain tax matters.
Revenue Reconciliation Act of 1993 (RRA)
Chapter 1 of Title XIII of the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66), signed into law on August 10, 1993 by President Clinton. The major tax provisions of OBRA ‘93 are contained in the RRA.
Revenue Ruling (Rev. Rul.)
A rule issued by the Internal Revenue Service to interpret the way tax law applies to a specific question.
Rider
A special policy provision or group of provisions that may be added to a policy to expand or limit the benefits otherwise payable.
Risk classification
The process by which a company decides how its premium rates for insurance should differ according to such risk characteristics as age, occupation, or disability and then applies the results to insurance applications.
Rollover
A transfer by a participant of all or part of a pension plan distribution from one qualified plan to another. Taxes on such a distribution are postponed until the participant later receives the transferred amounts. Qualified distributions may generally be rolled over into an IRA or another qualified pension plan.
Rollover IRA account
An IRA that has been established solely to receive a rollover (tax-free distribution) from a qualified pension plan for purposes of deferring the income tax on such distribution. 

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