Gnomenclature

Early distribution penalty is a tax penalty for distributions from a tax-advantaged retirement plan prior to the beneficiary’s reaching age 59½. The penalty is currently 10% in addition to any ordinary income tax charges. Early distribution penalties apply to the portion of the money in the retirement plan that has not previously been subject to income tax.

Emergency funds are savings set aside to cover unexpected expenses. Emergency savings should be only part of your plan for dealing with unexpected costs. You should also consider other resources, such as your discretionary income, available credit, and long-term assets.

An employer match is a contribution to a defined contribution plan made by an employer on an employee’s behalf. It is based on a formula that matches all or part of the employee’s contributions to the plan.

Endowments are charitable gifts designed to fund specific programs over time. Besides describing the purpose of the money, endowment policy statements should also describe how the money is to be invested. To make them last, endowments are often designed to keep the principal of the gift intact while spending no more than the expected investment earnings on the money.

Equity is the amount of a property’s value over and above what you owe on it. Equity contributes to your net worth. It also can give you the flexibility to refinance or borrow against the equity. Use this formula to calculate it:

Equity = Current market value – Remaining balance of any mortgages on the property

Expansion is a term used to describe a period when the economy is growing. This is generally measured by a positive change in the inflation-adjusted Gross Domestic Product (GDP).