Retirement glossary

A–F

• 401(k) — an employer-sponsored retirement account. Contributions are pre-tax (Traditional) or post-tax (Roth). Often includes an employer match.
• 403(b) — the 401(k) equivalent for nonprofit and public-school employees.
• 457(b) — a retirement plan for state/local government employees. No early withdrawal penalty after leaving the employer.
• Backdoor Roth — contributing to a Traditional IRA with after-tax dollars, then converting to a Roth IRA. Legal workaround for high earners.
• Catch-up contribution — extra retirement contributions allowed for people aged 50+.
• Cliff vesting — an employer match schedule where you get 0% until a specific anniversary, then 100%.
• COLA (Cost-of-Living Adjustment) — an annual increase to Social Security benefits to keep pace with inflation.
• Contribution limit — the maximum you can put into a retirement account per year, set by the IRS.
• FIRE (Financial Independence, Retire Early) — a movement focused on high savings rates to enable early retirement.

G–R

• Graded vesting — an employer match schedule where you earn ownership gradually (e.g., 20% per year over 5 years).
• HSA (Health Savings Account) — a triple-tax-advantaged account for medical expenses. Requires a high-deductible health plan.
• IRA (Individual Retirement Account) — a tax-advantaged retirement account you open yourself. Traditional (pre-tax) or Roth (post-tax).
• IRMAA (Income-Related Monthly Adjustment Amount) — a surcharge on Medicare premiums for higher-income retirees.
• Mega backdoor Roth — contributing after-tax dollars to a 401(k) beyond the normal limit, then converting to Roth.
• Pension — a defined-benefit retirement plan that pays a fixed monthly amount for life based on salary and years of service.
• QDRO (Qualified Domestic Relations Order) — a legal order used to split retirement accounts during divorce without triggering penalties.
• QCD (Qualified Charitable Distribution) — donating from an IRA directly to charity, which counts toward your RMD without being taxable.
• RMD (Required Minimum Distribution) — the minimum amount you must withdraw from Traditional retirement accounts starting at age 73.
• Rollover — moving money from one retirement account to another (e.g., old 401k to an IRA) without triggering taxes.
• Roth conversion — moving money from a Traditional IRA/401k to a Roth, paying taxes now for tax-free withdrawals later.

S–V

• Safe withdrawal rate — the percentage of a retirement portfolio you can withdraw annually with high confidence of not running out. Often cited as 4%.
• SEP IRA — a Simplified Employee Pension IRA for self-employed individuals. Higher contribution limits than a regular IRA.
• Sequence of returns risk — the danger that poor market returns early in retirement permanently damage your portfolio.
• Social Security — the federal retirement benefit funded by payroll taxes. Claimable from age 62 to 70, with higher benefits for later claiming.
• Solo 401(k) — a 401(k) for self-employed individuals with no employees. Allows both employee and employer contributions.
• Target-date fund — a mutual fund that automatically adjusts its stock/bond mix as you approach a target retirement year.
• Vesting — the schedule by which employer contributions to your retirement account become fully yours.