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Meaning / Definition of

Catch-up Contribution

Categories: Retirement and Pension,

You are entitled to make an annual catch-up contribution to your employer sponsored retirement savings plan and individual retirement account (IRA) if you're 50 or older. The catch-up amounts, which are larger for employer plans than for IRAs, increase from time to time based on the rate of inflation. You are eligible to make catch-up contributions whether or not you have contributed the maximum amount you were eligible for in the past. And if you participate in an employer plan and also put money in an IRA, you are entitled to use both catch-up options.Earnings on catch-up contributions accumulate tax deferred, just as other earnings in your account do. And when your primary contributions are tax deferred, so are your catch-up contributions.health savings accounts (HSAs), which you're eligible to open if you have a high deductible health plan (HDHP), allow catch-up contributions if you're at least 55. Your eligibility to make any contributions to an HSA ends when you turn 65.

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Definition / Meaning of

Nonprofit

Categories: Business and Management,

Charitable, cultural, and educational organizations that exist for reasons other than providing a profit for its owners, directors, or members are nonprofit organizations. However, these organizations can generate income to pay for their activities, salaries, and overhead by charging for services, making investments, and soliciting donations and memberships. A nonprofit arts center, for instance, may charge patrons for tickets and event subscriptions. Nonprofits incorporate in the states where they operate and are exempt from the state income taxes that for-profit corporations must pay. Some but not all qualify for federal tax-exempt status under section 501(c)(3) of the internal revenue code. Contributions to those qualifying organizations are tax deductible, though tax rules govern the percentage of your income you may deduct for gifts to different types of nonprofits.In exchange for these tax benefits, nonprofits must comply with some of the same financial reporting rules that for-profit corporations follow. For instance, nonprofits generally must follow corporate governance rules and make their financial reports available to the public.

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