Financial Planning Terms

  • Beneficiary: A person named in a life insurance policy, annuity, will, trust, or other agreement to receive a financial benefit upon the death of the owner. A beneficiary can be an individual, company, organization, and so on.
  • Liquidity: How quickly and easily an asset or security can be converted into cash.

  • Retirement Planning: Involves choosing retirement income goals and financial steps to reach those goals. We can help you set goals that are Specific, Measurable, Achievable, Relevant, and Timely. Common investments are IRAs and 401ks. Planning will take into account everything from assets and income to future expenses and liabilities.

  • Tax Planning: Similarly, comprehensive to retirement planning, tax planning aims to ensure that you get the largest amount of your money possible for retirement when taking taxes into consideration.

  • 401k Plan: A retirement account that you can fund and employers can make matching contributions to. There is a Traditional and Roth version, which change when the funds are taxed. You, as an employee, can have either or both types of accounts.

  • 403b Plan: A retirement account for certain employees of public schools and tax-exempt organizations. This includes teachers, school administrators, professors, government employees, nurses, doctors, and librarians. Unlike the private sector workers with 401k plans. There is quicker vesting than with a 401k and more catch-up contributions are possible, but there may be more limited investment choices and less protection from creditors than 401ks.

  • College Plans: There are many ways to prepare your child financially for college before they turn 18 years old. Some methods include making a Florida Prepaid account, making a 529 savings plan, Roth IRAs, and more. We can help you determine what plan works most for you.

  • Estate Planning: Determining how assets will be handled after death. It takes into consideration properties and financial obligations in case of incapacitation as well. This process is similarly comprehensive as retirement planning. This often includes writing a will, setting up trust accounts and beneficiaries, setting guardians for living dependents, naming an executor of the estate to oversee the terms of the will, setting up or updating beneficiaries, funeral arrangements, establishing annual gifting for qualified organizations to reduce the taxable estate, and setting a durable power of attorney (POA) to direct other assets and investments.

  • Money Management: Money management is the process of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. This is an extremely broad term that applies to many situations. This is also an important thing for anyone with lots of money to do. A more specific term would be investment or portfolio management.

  • Financial Planning: Similar to retirement planning, we will review your overall financial goals and help create a plan of action to seek to achieve them. Though this may cover things like an emergency fund, saving money or reducing debt, and being tax efficient.

  • Portfolio Management: Creating and maintaining an investment account.

    • We can help with choosing the right investment for you be it certain stocks, bonds, mutual funds, exchange-traded funds (ETFs), or alternative investments to meet your objectives depending on things like risk tolerance and need for liquidity. Unlike financial planning, where only recommendations are made, portfolio management includes making trading decisions on a day-to-day basis.

  • Money Purchasing Pension Plans: A qualified retirement plan, meaning it is eligible for tax benefits and subject to tax regulations. This can be used in tandem with profit-sharing plans and other retirement plans to increase your amount of annual savings.

    • However, company contributions must be constant, regardless of their levels of profit or loss. This plan is also tax-deferred until the money is withdrawn and you, as an employee, are fully vested. However, given the requirements and cost to use this plan, it is usually best to talk with an expert to ensure that you can use this type of account to its fullest potential.

  • Profit-Sharing Plans: A type of retirement plan where the employees get a part of the profits that they produce. Also known as a deferred profit-sharing plan (DPSP). You can receive a percentage of the quarterly or annual profits of the company, all the way down to 0% at the company’s discretion. You cannot contribute to this type of plan and your employer decides how much to add to the plan.

THE INCOMPASS GROUP LLC and LPL Financial do not provide legal advice or services.  Please consult your legal advisor regarding your specific situation.