Cash Or Deferred Arrangement - CODA
Without acronyms, we wouldn’t have terms like BASE jumping, CARE package, or SCUBA.
But finance acronyms are even better. For example: CODA. It stands for a “Cash or Deferred Arrangement." It’s a fancy way to describe something else for legal purposes. But we’ll give you a simple example of one: Your 401(k).
A CODA is a program that allows employees to defer part of their earnings for the purposes of growing that portion of their income tax-free until retirement.
There are pretty strict regulations around this area of employee benefits, and you’ll need to make a few difficult decisions along the way:
• You have to decide on the specific percentage of your income to allocate.
• You have to decide if the CODA plan is a cash plan, a stock bonus plan, a profit sharing plan, or one of many other options.
• You have to decide to get up every day, stare into your own blackened eyes in the mirror, feel your heart thumping through that button-down shirt, and confess to yourself that there are only 6,865 days left with that god-forsaken company until you can finally retire for maybe two decades, and then ultimately shove off this mortal coil and discover once-and-for all what lies well beyond this maddening and ever-expanding cage of beasts and man.
• You have to decide what color pen to sign the CODA agreement with at the HR meeting.
Related or Semi-related Video
Finance: What is a Money Market Fund?80 Views
finance a la shmoop. what is a money market fund? isn't it a strange concept
to think about going to a market to buy money? [man walks through grocery store]
well yeah it's strange but the practice exists and it's a huge multi trillion
dollar market today. the key word here is money and not investment. why such a big
diff? well because the notion of investing implies duration. that is when
you invest in a nice fixer-upper home or a tractor distribution company or shares
in a fat dividend-paying bank you're investing for presumably a long time [people stand in line]
like years maybe decades maybe centuries if you can find the right miracle pill.
but here we're talking about money like the stuff you can buy candy with. so it's
short term not long and a money market fund basically comprises many series of
pretty safe bonds that are all coming due in the next 30 to 90 days. sometimes [pie chart]
longer than that sometimes shorter but generally in the very near future. so why
would you care about a money market fund? well because it pays you slightly more
interest on your money than say a bank checking account. and lots of people in
corporations need cash just sitting around to pay their bills, so there are
tons of money market funds out there available and that's the gist of a money
market fund. we're sure you'll have plenty of experience with them by the
time you hit your sixth hundredth birthday day [people cheer and hold birthday cake]
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