CareSave Glossary
A
B
Bonds
Loans to companies or governments that pay a set amount of interest over a period of time. Any bond income may help reduce risk but provides only moderate growth potential.
Beneficiary
The person who will receive your benefits when you die.
C
Compounding interest
Interest computed on accumulated interest as well as on the original principal.
D
Diversification
Investing your account balance in more than one type of fund to spread your investment risk.
Disabled
A condition that means you cannot perform the work you were doing when the disability occurred nor any other comparable job.
E
Eligibility
A set of conditions you must meet to participate in the CareSave Plan. If you are a regular full-time employee, part-time, or per diem employee, you are immediately eligible to participate in the Plan.
ERISA
Employee Retirement Income Security Act of 1974. One of the laws that governs retirement plans and entitles plan participants to certain rights.
Eligible absences
Time for which you are paid, but are away from work on approved leave. This includes leave for funerals, jury duty, military duty, vacation, holiday, and sick pay.
Eligible annual pay
The amount you are paid from Caremark Rx which includes your base pay, overtime, and pay for eligible absences. This does not include any money you receive from the Company for such benefits as health coverage, moving expenses, discretionary awards, or similar reimbursements.
F
G
H
I
Investment elections
Your decisions about how to invest your CareSave account. You may select a percentage of your total account, from 0% to 100%, to be invested in each fund.
J
K
L
Long-term risk
The chance that your investment might not grow enough to help you meet your financial goals for retirement. Generally speaking, investments with higher long-term risk may have lower potential returns in the long term.
Life Only Annuity
A form of payment in which you receive a monthly benefit for life, with nothing paid to your spouse after you die. If you are married and elect this form of payment, your spouse must consent to this in front of a notary.
M
Mutual Fund
An investment that, by selling shares, obtains the money to invest in a variety of securities.
Money Market
An investment option that seeks to preserve your principal investment and offer some income. It invests in investment contracts issued by high-quality insurance companies and banks
N
Nondiscrimination testing
IRS plan testing performed on the CareSave Plan each year to make sure employees at all levels share the tax advantages of the Plan. For example, the test compares the pre-tax contributions made by highly compensated employees and non-highly compensated employees. The same analysis is done on the Company matching contributions.
O
P
Prime rate
The interest rate that commercial banks charge their most creditworthy borrowers, such as large corporations.
Pre-tax contribution
A contribution that is made to your CareSave account before federal (and in some cases state and local) income taxes are withheld.
Plan document
The legal document that outlines the CareSave Plan provisions. This document shall govern the Plan at all times.
Participation
When you have met all the eligibility requirements under the CareSave Plan and enroll in the Plan.
Principal Financial Group
The record keeper for the CareSave 401(k) Retirement Savings Plan.
Q
Qualified Joint and Survivor Annuity
A form of payment in which you receive a reduced benefit each month for your lifetime and, when you die, your spouse continues to receive the same amount until he or she dies. Your benefit is reduced because benefits are expected to be paid over a longer period of time - your life and then your spouses life.
QDRO (Qualified Domestic Relations Order)
A court order which requires the CareSave Plan Administrator to pay benefit payments to your former spouse.
R
Rollover
A distribution from a former employer's tax-qualified retirement plan or rollover IRA which can be contributed into the CareSave Plan. A direct rollover is paid directly to the CareSave Plan by having a check prepared by the former plan administrator and sent to the CareSave Plan. This money does not have taxes withheld.
Rollover IRA
An IRA set up to receive money from an employer-sponsored, qualified retirement plan. The money you deposit in a rollover IRA cannot be combined with other IRAs you may have.
Retirement Service Specialist
An employee at the Principal Financial Group, the CareSave record keeper, who can answer your questions and send you information about the CareSave plan.
S
Summary Plan description
A document which summarizes the provisions in a plan document and is distributed to the plan participants.
Stocks (equity)
An investment option that is a share of a corporation. This type of investment generally yields higher potential returns than other common investment options, but stock also carries the highest short-term risks.
Short-term risk
The chance your investment might decline in value daily, weekly, or even quarterly. Stocks, for example, usually have higher short-term risk than bonds. In the long run, investments with higher short-term risk generally yield higher potential returns. With more time to save, you can ride out short-term risks and enjoy higher potential returns in the future.
T
Tax-qualified retirement plan
A type of retirement plan that meets the legal requirements to be entitled to special tax treatment.
Tax-deferred
You will not have to pay taxes on your savings or earnings on your savings until you make withdrawals from the Plan.
U
V
Volatility
The up and down swings in investment returns.
Vesting
Your ownership of your money in the CareSave Plan.
W
X
Y
Z
First published September 28, 2006
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