Retirement resources

Accrual/Accrued

The accumulation or addition of specific benefits over time, usually based on a set formula(s), as in a defined benefit pension plan.

Actively Managed Funds

Investment managers select specific investments with the goal of outperforming an investment benchmark (for example, the S&P 500). Because more work goes into researching and choosing specific investments, an actively managed fund may cost more to run than passively managed funds.

After-Tax Contributions

Also known as nondeductible contributions. A portion of an employee’s salary contributed to a retirement plan but still subject to Federal income tax at the time of contribution. The amount contributed is not subject to Federal income tax upon distribution from the plan, but earnings on the contributions will be subject to the tax. These contributions are also called voluntary contributions.

Alternate Payee

A spouse, former spouse, child or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all or a portion of the benefits payable under the qualified retirement plan with respect to the participant.

Annuity

A contract that provides for periodic payments (fixed or variable) for life or for a definite period of time.

Asset Allocation

The process of deciding how investment dollars will be allocated among various classes of financial assets, such as stocks, bonds and short-term reserves. According to financial experts, the investment mix that a participant chooses has a greater impact on long-term investment results than the performance of individual investment options that a participant selects.

Before-Tax Contributions

Also known as elective deferrals or pre-tax contributions. The portion of an employee’s salary contributed to a plan it would not be included in the individual’s gross income for Federal tax purposes. The amount contributed and earnings on the before-tax contribution are subject to Federal income tax when distributed from the plan.

Beneficiary

A person designated by a participant (or specified by the terms of the plan) who is or may be eligible for benefits under the plan if the participant dies.

Beneficiary for the Portable Pension Account (PPA)

A person designated by the participant to receive the vested retirement benefit accrued under the Portable Pension Account formula if he or she dies prior to retirement. If the participant is married and dies before benefits begin, his or her spouse is automatically the beneficiary. However, the participant may designate another person as the beneficiary if the participant submits his or her spouse’s written and notarized consent.

Catch-Up Contributions

Additional elective deferral contributions that participants age 50 or older make to a defined contribution plan.

Company Match

The amount, if any, the company contributes on the participant’s behalf to his or her retirement account based on his or her pre-tax contributions. The percentage of the company’s match the participant owns depends upon the vesting schedule.

Compensation Credits in the Pension Plan (Portable Pension Account/PPA)

An amount accrued under the PPA formula for each plan year in which the participant is credited with a year of credited service. Compensation credits are added on the last day of each plan year and are based on a percentage of the prior calendar-year eligible earnings. The actual percentage depends on the participant’s combined age and years of credited service for benefit accrual at the end of the prior plan year. The years of credited service used in determining the PPA benefit are not limited.

Compounding

The growth that comes from investment income, as well as gains on both the original principal and the previously reinvested income and capital gains of an investment.

Credited Service for Benefit Accrual

A participant accrues one year of credited service for benefit accrual for each plan year (June 1 through May 31) in which he or she has been credited with at least 1,000 hours of service with a Participating Employer. Years of credited service for benefit accrual do not include years during which a participant was covered under a collective bargaining agreement that did not provide for his or her participation in a particular pension plan.

Credited Service for Vesting in the Pension Plan

A year of vesting service is credited for each plan year in which a participant is credited with at least 1,000 hours of service. A participant may also have vesting service for service with affiliated or acquired companies.

Defined Benefit Pension Plan

A retirement plan that guarantees a certain benefit, usually based on a formula that considers eligible earnings and service in the period before retirement. Employers bear the investment risk with defined benefit pension plans.

Defined Contribution Pension Plan

A retirement plan offering a benefit that is dependent on contributions made by the employer and the employee, and on the investment returns earned by those contributions. Employees bear the investment risk with defined contribution pension plans.

Delayed Retirement Date

The first of the month coincident with, or the first of the month following, the date on which the participant ends employment after attainment of normal retirement age, for any reason other than death.

Direct Rollover

A distribution from a qualified plan or 403(b) plan that is remitted directly to another qualified plan or to an IRA and is reported to the IRS as a rollover.

Distributions

Redemptions (withdrawals) paid to a participant from his or her retirement plan.

Early Retirement Date

The first of the month coincident with, or the first of the month following, the date on which the participant decides to retire – typically between ages 55 and the normal retirement age after the participant is vested.

Hardship Withdrawal

Hardship withdrawals allow the participant to withdraw pre-tax assets from the plan. Hardship withdrawals are based on a participant's immediate and heavy financial need, and the withdrawal must be limited to the amount of the need. The reason for the withdrawal of assets must be: payment of medical fees incurred by the participant or dependents, hardship due to a natural disaster, payment of funeral expenses, purchase of a principal residence, damage to a principal residence, payment of tuition and related expenses for the next 12 months or payment of amounts to prevent eviction.

In-Service Withdrawal

A withdrawal from an employer-sponsored retirement plan by a participant who remains employed.

Interest Credits in the Pension Plan

Interest credits are added at the end of each fiscal quarter (August 31, November 30, February 28, and May 31) after the participant receives his or her first compensation credit. The interest credits are based on the total value of compensation and interest credits that the participant has already received. The interest crediting rate is defined per the plan and may change annually.

Joint and Survivor Annuity

This pension plan form of payment provides a level monthly benefit payable for the participant’s lifetime. Upon the participant’s death, his or her beneficiary continues to receive a percentage of these payments for his or her lifetime. The participant chooses the percentage the beneficiary receives: 50%, 75% or 100% of the benefit amount. A 50% joint and survivor annuity is the normal form of payment for married participants.

Life Annuity with 60, 120, or 180 Payments Guaranteed

This pension plan form of payment provides a level monthly payment for life, with the guarantee that upon the participant’s death, the beneficiary receives any payments the participant had not received within a guaranteed time period. The guaranteed period can be 5 years (60 months), 10 years (120 months) or 15 years (180 months).

Lump Sum Benefit in the Pension Plan

The current value of the participant’s full vested benefit in one single lump-sum payment. The lump-sum benefit form of payment is available only for benefits accrued under the Portable Pension Account formula.

Lump-Sum Distribution in the 401(k) Plan

Payment(s) representing an employee's interest in a qualified retirement plan. The payment must be prompted by retirement (or other separation from service), death, disability, or attaining age 59½, and must be made within a single tax year.

Maximum Compensation Limit

The Internal Revenue Service limits the maximum compensation that can be used to determine the participant’s benefits under the retirement plans. The limit is indexed by the Secretary of the Treasury, based on increases in the cost of living. The limit may be increased each plan year.

Medicare

A Federal program that pays for certain health care expenses for people aged 65 or older. Enrolled individuals must pay deductibles and co-payments, but a large portion of their medical costs are covered by the program. Medicare is less comprehensive than some other health care programs, but it is an important source of post-retirement health care. Medicare is divided into three parts. Part A covers hospital bills, Part B covers doctor bills and Part C provides the option to choose from a package of health care plans.

Normal Retirement Age in the Pension Plan

Normal retirement age is the age at which a participant can retire and receive an unreduced benefit for benefits accrued under the Traditional Pension Benefit formula.

Participant (Employee) Loans

Distributions from qualified plans that are not subject to taxation. In order to be termed a "loan," the distribution must: be repaid on at least a quarterly basis, feature a level amortization and have a "market" interest rate.

Participating Employer

An employer whose eligible employees are covered by a specific retirement plan.

Passively Managed Funds

Index-based funds are also known as passively managed funds. Index funds generally try and track the performance of a given market. In other words, these funds replicate as closely as possible a particular index (for example, the S&P 500).

Pension Benefit Guaranty Corporation (PBGC)

Certain benefits under the pension plan are insured by the PBGC if the pension plan terminates. However, the PBGC does not insure all types of benefits under covered plans, and the amount of benefit protection is subject to limitations. Generally, the PBGC insures certain vested normal retirement age benefits, early retirement benefits, and certain disability and survivor's pensions. Visit the PBGC Web site at www.pbgc.gov for more information.

Pension Plan

A qualified retirement plan available at no cost to eligible employees, either through the FedEx Corporation Employees’ Pension Plan or the FedEx Freight Pension Plan. Any employee hired or rehired on or after January 1, 2020 is not eligible to participate in the plan(s).

Plan Year in the Pension Plan

The 12-month period beginning on June 1 and ending on the following May 31.

Plan Year in the Retirement Savings Plan

The 12-month period beginning on January 1 and ending on December 31.

Portable Pension Account (PPA) Formula

A formula under which accrued benefits from the pension plan are calculated.

Qualified Domestic Relations Order (QDRO)

A domestic relations order that creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a qualified retirement plan. An alternate payee may be a spouse, a former spouse, a child or another dependent of the plan participant.

Qualified Retirement Plans

A plan provided by an employer for employees after retirement that meets the requirement of Internal Revenue Code Section 401(a) and is eligible for special tax considerations. For example, employers can deduct plan contributions made on behalf of eligible employees on the business' tax return as business expenses, and earnings on plan assets are not taxed until they are distributed. A defined benefit pension plan generally pays a lifelong predetermined benefit based on the employee’s length of service and eligible earnings. In a defined contribution pension plan, employees are given the option of contributing to a plan offered by the employer.

Rollover

A tax-free transfer of cash or other assets from one qualified retirement plan to another. An IRA holder may shift assets from his or her present IRA to another. Distributions from a qualified retirement plan may also be rolled over to an IRA or to another employer's plan.

Roth contributions

Roth contributions are made on an after-tax basis, which means you pay income taxes now, and then put that taxed money into the retirement account to invest. When you contribute to your Retirement Savings Plan (RSP)/401(k) account on a Roth basis, the earnings on your contributions grow tax-free. And your withdrawals can be tax-free, as long as it has been at least five years since you made your first Roth contribution, and you meet one of the following conditions:

1. You are at least age 59 1/2 when you take the money out.
2. You become disabled.
3. The withdrawal is paid to a beneficiary on or after your death.

Roth conversions

In addition to making Roth contributions, you can take advantage of Roth in-plan conversions and automatic Roth conversions. Both allow you to convert pre-tax and traditional after-tax money to Roth money.

Roth in-plan conversions

The Roth in-plan conversion feature allows you to convert all or part of your existing pre-tax and traditional after-tax savings to Roth money within your plan account. This type of conversion is not automatic. You have to initiate it yourself. Once you initiate a conversion, you cannot undo a conversion within the plan.

Automatic Roth conversions

The automatic Roth conversion feature allows you to automatically convert new traditional after-tax contributions to Roth on the same day you make them. You’ll pay taxes on the contributions themselves because you’re making them on an after-tax basis, but the earnings generally won’t be taxed when you take the money out. Withdrawals can be tax-free, as long as it has been at least five years since you made your first Roth contribution and you meet one of the following conditions:

1. You are at least age 59 1/2 when you take the money out.
2. You become disabled.
3. The withdrawal is paid to a beneficiary on or after your death.

(Note: Highly Compensated Employees are not eligible to contribute on a traditional after-tax basis.)

Social Security

The comprehensive Federal program of benefits providing workers and their dependents with retirement income disability income, and other payments. The Social Security tax is used to pay for the program.

Social Security Administration (SSA)

An independent government agency which implements social programs, including Federal old-age pensions and disability insurance. Social Security was established in 1944, and was later placed under the Department of Health and Human Services.

Social Security Leveling Option (Traditional Pension Benefit formula only)

This form of payment provides an increased monthly pension benefit paid to the participant until Social Security full retirement age (65, 66 or 67, depending on when he or she was born). After that age, the participant will receive a reduced monthly pension, but may elect to start receiving a monthly Social Security benefit that will make up the difference – so the total amount he or she receives each month may be approximately equal to, or "level" with, his or her original pension payment. In addition, the calculation of the Social Security leveling option does not use the participant’s actual Social Security benefit, only an estimated amount based on his or her FedEx employment. So once your pension payment reduces at the age the participant selected, your monthly payment (pension plan plus your Social Security) may not be equal to the pension plan (only) payment he or she was first receiving. If you elect this option, no payments will be made to anyone after the participant’s death.

Straight Life Annuity

This pension plan form of payment provides the participant with a level monthly payment for his or her lifetime. Upon the participant’s death, no further benefits will be payable. This is the normal form of payment for unmarried participants. If the participant is married, his or her spouse's notarized consent is required in order to elect this form of payment.

Summary Plan Description (SPD)

A document containing a comprehensive description of a retirement plan(s), including the terms and conditions of participation. At FedEx, the summary plan description is called the Your Retirement Benefits book, or YRB.

Survivor Benefits

A person who may be eligible to receive all or a portion of any vested benefit from a retirement plan.

Suspension of Pension Benefit Rules

Please note: this applies to the FedEx Freight Pension Plan only. A retiree who is collecting a pension plan benefit and is re-employed by any FedEx Controlled Group Member must work less than 70 hours per month to collect uninterrupted monthly pension plan benefits.

Target Retirement Funds

A fund made up of a mix of stocks, bonds and short-term reserves, based on the anticipated retirement date a participant selects, that is intended to be a one-fund selection for his or her portfolio. The fund moves toward a more conservative mix (a larger proportion of bonds and smaller proportion of stocks) as the target retirement date is approached. Target retirement funds are generally offered in five-year intervals. Many of the target retirement funds continue to have exposure to stocks and equities well beyond the date of the fund. Also called lifecycle fund or target date fund.

Traditional Pension Benefit (TPB) Formula

A formula under which accrued benefits from the FedEx Corporation Employees’ Pension Plan may be calculated. Effective June 1, 2008, all eligible employees will accrue future benefits solely under the Portable Pension Account formula. All benefits accrued under the TPB formula were capped as of May 31, 2008.

Vesting

Represents a non-forfeitable interest of a participant in his or her account balance (under a defined contribution pension plan) or in his or her accrued benefit (under a defined benefit pension plan).

Vesting in the Pension Plan

Vesting refers to the employee’s right to receive a pension benefit after he or she terminates employment with all FedEx Controlled Group Members – even if he or she terminates employment before retirement age. Beginning June 1, 2008, an employee is fully vested in the pension plan after he or she has been credited with three years of vesting service.

Withdrawal

Taking money out of a tax-advantaged retirement plan, which makes money subject to tax and possible excise tax if a participant is under age 59½.

Year of Credited Service in the Pension Plan

An employee accrues one year of credited service for each plan year (June 1 through May 31) in which he or she has been credited with at least 1,000 hours of service while employed by a Participating Employer.