Pension Terms U - Z
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Unbundled Administration: The process by which different individuals or companies perform various aspects of plan administration. (Compare with Bundled Services.)
Unemployment Compensation Amendments of 1992 (UC '92): Enacted on July 3, 1992. The tax measure expanded rollover rules and introduced mandatory income tax withholding on certain plan distributions.
Uniform Points Plan: A plan in which the allocation of the contribution is based on points, generally attributable to service or compensation.
Uniform Retirement Age: A retirement age that is the same for all plan participants. For this purpose, a retirement age based on attainment of a stated age and completion of a requisite number of years of participation is considered to be uniform, as is Social Security normal retirement age.
Uniformed Services Employment and Reemployment Rights Act of 1994(USERRA): Enacted on October 13, 1994. This act prohibits discrimination against employees because of membership in the uniformed services.
Unincorporated Business: A business organization that is not a corporation, such as a partnership or sole proprietorship.
Unit Benefit Plan: A type of defined benefit pension plan that calculates benefits on the basis of units earned by the employee during his or her employment, taking into consideration length of service as well as compensation.
Unpredictable Contingent Event: Events other than age, service, compensation, death, or disability, or an event which is reasonably and reliably predictable and that gives rise to benefit payments.
Unsafe Harbor Percentage: As an alternative to the ratio percentage coverage test, a plan can apply coverage testing using the average benefits test. The unsafe harbor percentage is determined using an IRS prescribed table based on the non-highly compensated employee concentration percentage and is used to determine whether the facts and circumstances portion of the nondiscriminatory classification test has been satisfied.
User Fee: The fee charged by IRS for each request for a determination letter, letter ruling, opinion letter, and other similar rulings or determinations.
Value Stocks: Those stocks that have relatively high dividend yields and that sell at relatively low prices in relation to their earnings or book value. Mutual funds that emphasize value stocks are sometimes called growth and income or "value" funds.
VCP: See Voluntary Correction Program with Service Approval.
Vertically Integrated Business: A business that provides property or services at two or more different levels; for instance, an oil company that both sells on a wholesale level and operates retail stores.
Vested Benefits: Accrued benefits of a participant that have become nonforfeitable under the vesting schedule adopted by the plan. Thus, for example, if the schedule provides for vesting at the rate of 20 percent per year, a participant who has been credited with three years of service has a right to 60 percent of the accrued benefit. If he or she terminates service without being credited with any additional years of service, he or she is entitled to receive 60 percent of the accrued benefit.
Volume Submitter Plan: Under the volume submitter program, a practitioner who qualifies may request IRS to issue an advisory letter regarding a volume submitter specimen plan. A specimen plan is a sample plan of a practitioner (rather than the actual plan of an employer) that contains provisions that are identical or substantially similar to the provisions in plans that such practitioner's clients have adopted or are expected to adopt.
Voluntary Contributions: Amounts that a participant voluntarily contributes to a plan in addition to the contributions made by the employer. Voluntary contributions, unlike employer contributions, are not deductible on the employee's tax return.
Voluntary Correction Program with Service Approval (VCP): A program that permits plan sponsors to voluntarily correct qualification failures in a qualified plan, 403(b) plan, SEP, or SIMPLE IRA and to obtain a compliance statement that provides that the corrections are acceptable and that IRS will not pursue disqualification of the plan.
Voluntary Fiduciary Correction Program: A program designed to encourage the voluntary and timely correction of possible fiduciary breaches by allowing the avoidance of potential ERISA civil actions initiated by DOL and assessment of civil penalties.
Waiver Amortization Base: The amount of the waived funding deficiency for a plan year.
Waiver Amortization Charge: The aggregate total of the waiver amortization installments with respect to the waiver amortization bases for a plan year.
Waiver Amortization Installments: The amounts necessary to amortize the waiver amortization base of the plan for any plan year in level annual installments.
Withdrawal Liabilities: An employer that withdraws from a multiemployer plan is liable for its proportionate share of unfunded vested benefits, determined as of the date of withdrawal. The liability is imposed upon withdrawal without reference to the plan's termination.
Working Families Tax Relief Act of 2004: Enacted on October 4, 2004. Among other changes and technical corrections affecting qualified retirement plans, the act reflected the modified treatment of elective deferrals for purposes of the employer deduction limits, by removing elective deferrals from consideration in the application of the exception to the 10 percent excise tax on nondeductible contributions.
Year of Service: A 12-month period during which the employee completes at least 1,000 hours of service for an employer. The measurement period commences on the employee's date of hire. Subsequent measurement periods can be measured from anniversaries of the date of hire or, alternatively, can shift to the plan year. If the computation period shifts to the plan year, an employee must receive credit for overlapping periods in each of the computation periods. Alternatively, the plan can credit years of service using some lower hour requirement or the elapsed time determination.
