Retirement Terms Beginning with ‘C’

CalPERS: "The California Public Employees' Retirement System (CalPERS), an organization that provides numerous benefits to its more than 1.6 million members, including health insurance, long-term care insurance, death benefits, mortgage program, and distribution of pension and retirement-related financial benefits. CalPERS Investments is the nation's largest public pension fund and, given its size, it is able to exercise significant pressure to make desired changes within the companies in which it invests."

Canada Pension Plan (CPP): "One of three levels of Canada's retirement income system, which is responsible for paying retirement or disability benefits. The Canada Pension Plan was established in 1966 to provide a basic benefits package for retirees and disabled contributors. If the recipient dies, survivors receive the plan's provided benefits. 
The CPP pays a monthly amount, which is designed to replace about 25% of the contributor's earnings on which initial contributions were based, and is indexed to the Consumer Price Index."

Canadian Royalty Trust (CANROY): "An oil, gas or mineral company that is organized as a trust rather than as a traditional corporation. The CANROY does not physically operate the oil, gas or mineral assets; operational activities are run by outside parties. 
Because they are organized as a trust, Canadian Royalty Trusts initially were not taxed at the corporate tax rate. This allowed a CANROY to save more cash, which it used to pay a larger-than-average dividend to its investors. The Canadian government changed its tax policy."

Carryover Basis: "A method for determining the tax basis of an asset when it is transferred from one individual to another. Carryover basis is often used when property is given as a gift to someone else and is the method for determining the basis for future tax payments."

Cash Balance Pension Plan: "A pension plan under which an employer credits a participant's account with a set percentage of his or her yearly compensation plus interest charges. A cash balance pension plan is a defined-benefit plan. As such, the plan's funding limits, funding requirements and investment risk are based on defined-benefit requirements: as changes in the portfolio do not affect the final benefits to be received by the participant upon retirement or termination, the company solely bears all ownership of profits and losses in the portfolio."

Cash Or Deferred Arrangement (CODA): The method of funding any type of qualified profit-sharing or stock bonus plan. Cash or deferred arrangements allow employees to contribute a portion of their salaries to the plan so that their savings can grow tax-deferred. The most common type of CODA is a cash bonus which is paid into their 401(k) plan, but it could also be a salary reduction."

Catch-Up Contribution: "A type of retirement savings contribution that allows people over 50 to make additional contributions to their 401(k) and/or individual retirement accounts. The catch-up contribution provision was created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), so that older individuals would be able to set aside enough savings for retirement."

Certified Financial Planner (CFP): "The CFP legal team has provided its official definition, along with trademarks: CFP and Certified Financial Planner marks are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements."

Charitable Gift Annuity: "A type of gift transaction where an individual transfers assets to a charity in exchange for a tax benefit and a lifetime annuity. As with any other lifetime annuity, when the beneficiary dies, the annuity payments are stopped, and the charity retains the remaining funds. In a typical charitable gift annuity, the annuity payouts are not limited to the contributed assets; however the actuarial calculations establishing payout amounts usually provide that a large residual amount should remain for the charity after the beneficiary's death."

Charitable Gift Life Insurance: "A method of contributing to charity by taking out life insurance on yourself with the charity as a beneficiary. Using charitable gift life insurance may allow donors to amplify their giving power. Rather than giving large cash gifts as part of a will, some donors find it easier to simply pay the life insurance premiums. "

Charitable Lead Trust­: "A trust designed to reduce beneficiaries' taxable income by first donating a portion of the trust's income to charities and then, after a specified period of time, transferring the remainder of the trust to the beneficiaries."

Charitable Remainder Trust: "A tax-exempt irrevocable trust designed to reduce the taxable income of individuals by first dispersing income to the beneficiaries of the trust for a specified period of time and then donating the remainder of the trust to the designated charity."

Chartered Retirement Planning Counselor (CRPC): "A professional designation awarded by the College for Financial Planning to individuals who complete a study program and pass a final multiple-choice examination. Successful applicants earn the right to use the CRPC designation with their names for two years, which can improve job opportunities, professional reputation and pay. Every two years, CRPC professionals must complete 16 hours of continuing education and pay a small fee to continue using the designation."

Chartered Retirement Plans Specialist (CRPS): "A professional designation awarded by the College for Financial Planning to individuals who specialize in creating, implementing and maintaining retirement plans for businesses. They must pass an exam demonstrating their expertise. Successful applicants earn the right to use the CRPS designation with their names for two years, which can improve job opportunities, professional reputation and pay. Every two years, CRPS professionals must complete 16 hours of continuing education and pay a nominal fee to continue using the designation."

Chartered Trust And Estate Planner: "A professional accreditation offered by the American Academy of Financial Management. This credential provides an overview of the various types of trusts available and their appropriate use. It also covers the phases and parties involved in the estate planning process."

Civil Service Retirement System (CSRS): "A system that provided the retirement, disability and survivor benefits for most U.S. civilian service employees working for the federal government. It was replaced in 1987 by the Federal Employees Retirement System (FERS), but employees who were originally set up through the CSRS still receive their benefits through that program, unless they were hired after 1983."

Clifford Trust: "Clifford Trusts allow grantors to transfer assets that produce income into the trust and then reclaim them when the trust expires. These trusts cannot last for a term of less than 10 years plus one day. Clifford Trusts were once commonly used as an effective and legal means of avoiding large tax expenses; the grantor would shift his assets to a trust which would then later be claimed by a recipient who would ideally be subject to a lower marginal tax rate."

Clone Fund: "A mutual fund that aims to replicate the performance or strategy of a larger, successful mutual fund. A clone fund may be set up by a mutual fund company when the original fund has grown too big to be managed efficiently, or if the company wishes to introduce a different pricing structure. In Canada, clone funds referred specifically to funds that used derivatives to bypass the foreign content restriction that previously existed in retirement accounts."

Codicil: "An addendum of any kind to a will. Codicils can alter, change, add to or subtract from the provisions in the will. They can be used to keep a will and testament current and up to date."

Conduit IRA: "A traditional IRA that holds only assets that were distributed from a qualified plan. Typically, the intention of using this type of plan is to store assets until they can be rolled into a new employer's qualified plan."

Contingent Beneficiary: "1. A beneficiary specified by an insurance contract holder who will receive the benefits if the primary beneficiary has died at the time the benefit is to be paid. 
2. A beneficiary who is only entitled to insurance proceeds if predetermined conditions have been met at the time of the insured's death (as can be found in a will). "

Corporate Pension Plan: "A formal arrangement between a company and its employees - or the employees' union - that provides funding for the employees' retirement. This pool of funds can be financed in several ways and will eventually be used to make periodic payments to retired employees. In most cases, both employer and employees make regular contributions to the plan. In the past, employers were wholly responsible for contributing to the plan based on an employee's work, length of employment and position held. "

Covered Earnings: "The total amount of an employee's pay that is eligible for use in the calculation of retirement benefits. Generally, the bulk of covered earnings arise for the employee's base pay; however, other types of compensation can be considered as part of the covered earnings amount. In the United States, covered earnings are work-related earnings that are subject to Social Security taxation."

Credit For Qualified Retirement Savings Contribution: "Also known as IRS Form 8880, the Credit for Qualified Retirement Savings Contribution form is a one-page tax form used to calculate the amount of an individual or married couple's saver's credit. As of 2009, the credit is available to individuals with income up to $26,500, heads of household with incomes up to $39,750 and married couples filing jointly with incomes up to $53,000."

Credit Shelter Trust (CST): "A type of trust that allows a married investor to avoid estate taxes when passing assets on to heirs. The trust is structured so that upon the death of the investor, the assets specified in the trust agreement (up to a specified maximum dollar value) are transferred to the beneficiaries named in the trust (normally the couple's children). However, a key benefit to this type of trust is that the spouse maintains rights to the trust assets and the income they generate during the remainder of his or her lifetime. (This type of trust is also referred to as an "AB Trust".)"

Crummey Power: "A technique that enables a person to receive a gift that is not eligible for a gift-tax exclusion, and change it into one that is eligible. Crummey power is often applied to contributions in an irrevocable trust; often in respect to life insurance. In order for the Crummey power to work, the gift must be stipulated as being part of the trust when it is drafted and the gift cannot exceed $12,000 annually per beneficiary of the trust (among other requirements)."

Crummey Trust: "An estate planning technique that can be employed to take advantage of the gift tax exclusion when transferring money and/or assets to another person, while placing limitations on when the recipient can access the money. A Crummey trust allows a parent to make lifetime gifts to his or her children, free from gift or estate taxes as long as the amount is equal to or less than the permitted amount (currently $13,000 per year), while protecting the money in a trust. With the Crummey trust, the family can continue making the annual $13,000 gift while placing the money in a protected fund that the child cannot access until a specified age."

Custodial Care: "Non-medical care that helps individuals with his or her activities of daily living, preparation of special diets and self-administration of medication not requiring constant attention of medical personnel. Providers of custodial care are not required to undergo medical training."

Cy Pres Doctrine: "Cy Pres represents a legal concept that gives courts the power to interpret the terms of a will or gift. This is done if the terms of the document cannot be carried out or legitimately, interpreted literally or performed legally. Cy Pres Doctrine provides the court with flexibility to interpret the perceived intent of the donor or testator, and implement its wishes."