Target benefit plan
A hybrid plan under which the annual contribution is determined as though the plan were a defined benefit plan but the amount of the retirement benefit actually received depends on the value of the assets that have been allocated to each participant’s separate account. The amount of employer contributions necessary to fund the plan is determined by using actuarial assumptions; it is the amount needed each year to accumulate a fund that will pay a targeted retirement benefit to each participant upon retirement. The target benefit is not, however, guaranteed, as it is in a defined benefit plan.
See time-accumulated restricted-stock award plan.
Tax Equalization Program
See Equalization Programs.
Taxable wage base
The maximum amount of an individual’s earnings that are subject to social security tax in a given year.
Tax code
The Internal Revenue Code.
Tax credit
A credit that reduces, dollar for dollar, the amount the taxpayer must pay in taxes, so that the government, in effect, is funding part of a tax-favored expenditure.
Tax deduction
An expenditure of other cost that, if itemized on the tax return, may be subtracted from gross income in determining income tax. Most, but not all, employee benefits costs are deductible. See also excludable.
Tax effectiveness
A measure used to evaluate different executive compensation options, calculated by dividing the executive’s after-tax value by the company’s after-tax cost.
Eligible for favorable tax treatment, such as tax deferral, accumulation of earnings on a pretax basis, and/or exclusion from the recipient’s taxable income.
Tax Reform Act of 1986
The largest revision of the Internal Revenue Code since it was first enacted.
Tax-sheltered annuity
An arrangement described in the Internal Revenue Code that allows employees of certain institutions to defer income to purchase an annuity at retirement.
Temporary life annuity
An annuity that is payable for a fixed number of years but only if the annuitant is still alive.
Term life insurance
The most common form of life insurance, it provides a death benefit if the insured individual dies within a specified term of years. Premiums are based on age.
Terminal funding
A method of funding a pension plan through the establishment of an actuarial reserve for retirement benefits at the time of a participant’s retirement, withdrawal from the plan, or benefits commencement. The amount funded is the entire actuarial present value of benefits for each respective participant as of the date such an event occurs.
A pension plan is considered to be terminated when the plan sponsor voluntarily terminates the plan. Generally, this termination occurs when the sponsoring employer is unable to continue funding the plan or does not desire to continue funding the plan. However, in certain instances, the Internal Revenue Service may determine that the plan has been terminated because the employer has failed to make plan contributions.
Third-country national
An employee working at a host location for a multinational company who is not a citizen of the host or base country.
Third-party administration
Administration of a group insurance plan by some person or firm other than the insurer or the policyholder.
Third-party administrator (TPA)
A firm or individual—other than the employer sponsoring the plan—that provides administrative services to a plan.
Thirty and out
A retirement option provided under a number of pension plans whereby the retirement of a participant with thirty years of credited service is permitted, regardless of the participant’s age.
Thrift plan
See savings plan.
Time-accelerated restricted-stock award (TARSAP) plan
Another name for performance-accelerated restricted stock.
Time off with pay
A benefits category that includes vacation, holidays, sick leave, lunch periods, and other paid leave.
Tin parachute
An agreement to pay lower-level employees a sum of money if they lose employment due to a change in control.
Top-hat plan
An unfunded nonqualified deferred compensation plan that provides benefits only to executives and other highly paid employees.
A pension plan is top-heavy and must meet certain additional requirements if key employees receive more than 60 percent of total benefits.
Total compensation
The complete pay package of direct and indirect compensation, including all forms of money, benefits, and services.
Total disability
An illness or injury that prevents an insured person either from continuously performing every duty pertaining to that person’s occupation or from engaging in any other type of work. (This wording varies among insurance companies.)
See third-party administrator.
Any arrangement whereby the benefits credits that have accumulated for a terminating participant are transmitted from one plan to another or to a central agency.
Travel accident policy
A limited insurance contract covering only accidents while an insured person is traveling, usually on a commercial carrier.
Triple option plan
A health insurance plan that includes an HMO, a PPO, and traditional insurance with joint underwriting, administered by one insurance carrier.
A legal entity that holds assets that belong to another.
Trust Agreement
A written document, which is often separate from the plan agreement, that specifies the methods of receipt, investment, and disbursement of funds under a pension plan.
Usually, a commercial bank, trust company, or individual that is responsible for the financial aspects of the trust assets.
Trusteed plan
An employee benefits plan for which an individual or an institution, such as a commercial bank or trust company, acts as the trustee.
Trust fund
A fund in which the assets are managed by a trustee or a board of trustees for the benefit of another party or parties. Although trust funds were used for funding defined benefit plans many years prior to the enactment of ERISA, under ERISA pension plan assets are required to be held in trust if an insurance contract is not in force.
Turnover assumption
An actuarial assumption that involves the probability that employment will be terminated for a reason other than death or retirement; it is used in estimating the amount of future retirement benefits that will become payable under the plan.
Twenty-four-hour coverage
Integration of workers’ compensation and privately provided health care benefits to save administrative costs and introduce managed-care elements into workers’ compensation. Twenty-four-hour coverage is not permitted under the workers’ compensation laws of most states.    

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