What Is a Qualified Automatic Contribution Arrangement (QACA)? Qualified automatic contribution arrangements (QACAs) refer to a rule established under the Pension Protection Act of 2006 to increase worker participation in self-funded retirement plans. Such plans include 401(k)s, 403(b)s, and deferred compensation 457s. Companies that use QACAs automatically enroll workers in the plans at a deferral
What Is a Qualified Charitable Organization? Qualified charitable organizations are nonprofit organizations that qualify for tax-exempt status, according to the Internal Revenue Service (IRS). They must be operated exclusively for one of the following purposes: religious, charitable, scientific, literary, educational, testing for public safety, the prevention of cruelty to animals or children, or the development
What Is a Qualified Dividend? Ordinary dividends are payments a public company makes to owners of its common stock shares. It is their share of the company’s profits and a reward for holding onto the shares. A qualified dividend is an ordinary dividend that can be reported to the IRS as a capital gain rather
What Is a Qualified Electric Vehicle? The term qualified electric vehicle refers to a plug-in electric passenger vehicle or light truck that allows the owner to claim a nonrefundable tax credit after purchase. These vehicles must have at least four wheels, be designed for use in the public, and were not used for commercial purposes. The
What Is a Qualified Foreign Institutional Investor (QFII)? The Qualified Foreign Institutional Investor (QFII) is a program that allows specified licensed international investors to participate in mainland China’s stock exchanges. The Qualified Foreign Institutional Investor program was introduced by the People’s Republic of China in 2002 to provide foreign institutional investors with the right to
A qualified longevity annuity contract (QLAC) is a deferred annuity funded with an investment from a qualified retirement plan or an individual retirement account (IRA). They are available for purchase through many insurance companies. A QLAC provides guaranteed monthly payments that begin after the specified annuity starting date. As long as the QLAC complies with
What Is a Qualified Opinion? A qualified opinion is a statement issued in an auditor’s report that accompanies a company’s audited financial statements. It is an auditor’s opinion that suggests the financial information provided by a company was limited in scope or there was a material issue with regard to the application of generally accepted
What Is a Putable Swap? A putable swap is a cancellable interest rate swap—containing an embedded put option—where one counterparty makes payments based on a floating rate, while the other party makes payments based on a fixed rate. The fixed-rate receiver (floating-rate payer) has the right, but not the obligation, to terminate the swap on
What Is Put-Call Parity? The term “put-call” parity refers to a principle that defines the relationship between the price of European put and call options of the same class. Put simply, this concept highlights the consistencies of these same classes. Put and call options must have the same underlying asset, strike price, and expiration date in
What Is a Put on a Call? A put on a call (PoC) is a type of compound option whereby a put option is written on a call option. Therefore, there are two strike prices and two exercise dates. If the option owner exercises the put option they will be short a call option, which
