Glossary · 98 terms
Retirement Accounts
All retirement accounts terms in the EquitiesAmerica.com glossary — plain-English definitions for American investors.
10-Year Rule (SECURE Act)(SECURE Act 10-Year Rule)
The 10-Year Rule is a mandatory distribution requirement under the SECURE Act of 2019 (codified in IRC Section 401(a)(9)(H)) that requires most non-spouse beneficiaries of inherited IRAs and other qualified retirement plans to distribute the entire account within 10 years of the account owner's death. The rule replaced the Stretch IRA strategy for most beneficiaries and substantially accelerated the timeline over which inherited retirement accounts must be fully distributed and taxed.
4% Rule(safe withdrawal rate)
The 4% rule is a retirement withdrawal guideline suggesting that retirees can withdraw 4% of their portfolio in the first year of retirement, then adjust that amount annually for inflation, with a high probability of not outliving their savings over a 30-year retirement horizon.
401(k)(401k)
A 401(k) is an employer-sponsored, tax-advantaged retirement savings plan that allows employees to contribute a portion of their pre-tax or after-tax salary, with many employers offering a matching contribution.
403(b)(403b)
A 403(b) is a tax-advantaged retirement savings plan available to employees of public schools, non-profit organizations, and certain other tax-exempt entities, functioning similarly to a 401(k) but with a few unique provisions.
457(b)(457b)
A 457(b) is a tax-advantaged deferred compensation retirement plan available to employees of state and local governments and certain non-profit organizations, notable for its unique double contribution rule and no early withdrawal penalty.
72(t) Distribution(SEPP)
A 72(t) distribution is a series of substantially equal periodic payments (SEPPs) from a retirement account that allows individuals under age 59½ to access retirement funds without incurring the 10% early withdrawal penalty, provided the payment schedule is maintained for a defined period.
After-Tax 401(k) Contributions(after-tax 401k)
After-tax 401(k) contributions are voluntary employee contributions to a 401(k) plan made with dollars that have already been subject to income tax, as opposed to pre-tax deferrals (which reduce current taxable income) or Roth 401(k) deferrals (which are also after-tax but grow and distribute tax-free). After-tax contributions enable participants to save beyond the standard deferral limit, forming the basis of the Mega Backdoor Roth strategy when paired with in-plan Roth conversions or in-service distributions.
Age 62 vs 67 vs 70 Claiming(Social Security claiming age comparison)
The Social Security claiming age decision — commonly framed as a choice between the earliest eligibility age of 62, Full Retirement Age (typically 67), and the maximum delay age of 70 — is the most consequential financial choice available to retirees, with the monthly benefit differing by up to 76% between the earliest and latest claiming ages.
Annuity(income annuity)
An annuity is a contract between an individual and an insurance company in which the individual makes a lump-sum payment or series of payments in exchange for regular disbursements beginning either immediately or at a future date, designed to provide a guaranteed income stream that cannot be outlived.
Automatic Enrollment(auto-enrollment)
Automatic enrollment is a 401(k) and other employer plan feature that enrolls eligible employees in the plan at a default contribution rate and investment allocation unless the employee affirmatively opts out, leveraging inertia to increase retirement plan participation rates.
Average Indexed Monthly Earnings(AIME)
Average Indexed Monthly Earnings (AIME) is the inflation-adjusted monthly average of a worker's highest 35 years of Social Security-covered earnings, used by the Social Security Administration as the input to the Primary Insurance Amount calculation.
Backdoor Roth IRA(backdoor Roth)
A backdoor Roth IRA is a legal tax strategy that allows high-income earners who exceed the Roth IRA income limits to fund a Roth IRA indirectly by making a non-deductible Traditional IRA contribution and then converting it to a Roth IRA.
Bend Points (Social Security)(PIA bend points)
Bend points are the dollar thresholds in the Social Security Primary Insurance Amount formula at which the replacement percentage applied to a worker's Average Indexed Monthly Earnings changes, creating a progressive benefit structure that replaces a higher fraction of earnings for lower-wage workers.
Beneficiary IRA(inherited IRA)
A Beneficiary IRA (also called an Inherited IRA) is an IRA established to receive assets from a deceased person's IRA or employer plan, with distribution rules that differ significantly from those applying to the original account owner.
Break-Even Analysis (Social Security)(Social Security break-even age)
Social Security break-even analysis calculates the age at which the cumulative lifetime benefits received from claiming later first equal and then exceed the cumulative benefits that would have been received from claiming earlier, helping individuals assess which claiming age maximizes lifetime benefit given assumptions about longevity.
Bucket Strategy(time segmentation)
The bucket strategy is a retirement income approach that divides a portfolio into separate segments — or buckets — each holding assets with different time horizons and risk levels, designed to match the liquidity needed for near-term spending while allowing longer-term assets to grow.
Cash Balance Plan(cash balance pension plan)
A Cash Balance Plan is a type of IRS-qualified defined benefit pension plan in which each participant has a hypothetical individual account that grows at a rate specified by the plan document — typically a fixed interest crediting rate plus an annual pay credit — rather than being tied directly to market returns. At retirement, the participant receives the accumulated hypothetical account balance either as a lump sum or as an annuity, and the employer bears the investment risk of funding the promised benefits.
Catch-Up Contribution(catch-up provision)
A catch-up contribution is an additional amount that individuals aged 50 or older are permitted to contribute to their retirement accounts above the standard annual limit, designed to help those approaching retirement accelerate their savings.
Cost-of-Living Adjustment (COLA)(COLA)
The Social Security Cost-of-Living Adjustment (COLA) is an annual automatic increase applied to Social Security and SSI benefit payments to preserve purchasing power, based on the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the prior year to the third quarter of the current year.
Creditor Protection (Retirement)(retirement asset protection)
Creditor protection for retirement accounts refers to the federal and state law shields that prevent most creditors from reaching assets held in qualified retirement plans and IRAs, making retirement savings one of the most protected asset classes for individuals facing bankruptcy or civil litigation.
Deemed Filing(deemed filing rule)
Deemed filing is the Social Security Administration rule under which a person who files for either their own retirement benefit or a spousal benefit is automatically considered to have filed for both benefits simultaneously, eliminating the ability to selectively claim one benefit while deferring the other.
Deferred Annuity(deferred annuity contract)
A deferred annuity is an insurance contract in which the owner makes one or more premium payments that accumulate on a tax-deferred basis, with income payments beginning at a future date — either through systematic withdrawals or annuitization.
Deferred Compensation (409A)(nonqualified deferred compensation)
Deferred compensation under IRC Section 409A refers to a legally binding promise by an employer to pay compensation to an employee in a future year, subject to strict federal rules governing the timing of deferral elections, permissible payment triggers, and the consequences of non-compliance.
Defined Benefit Plan(pension)
A defined benefit plan is a type of employer-sponsored retirement plan that promises participants a specified monthly benefit at retirement, calculated using a formula based on factors such as salary history and years of service, with the employer bearing the investment risk and funding obligation.
Defined Contribution Plan(DC plan)
A defined contribution plan is an employer-sponsored retirement plan in which the employee, the employer, or both make contributions to individual accounts, with the eventual retirement benefit determined by the total amount accumulated and the performance of the investments chosen.
Delayed Retirement Credits(DRC)
Delayed Retirement Credits are the permanent monthly benefit increases that a Social Security beneficiary earns for each month they defer claiming past their Full Retirement Age, adding approximately 8% per year to their Primary Insurance Amount for workers born in 1943 or later.
Disability Insurance (SSDI)(SSDI)
Social Security Disability Insurance (SSDI) is a federal program that provides monthly benefits to workers who have accumulated sufficient Social Security credits and have a qualifying disability that prevents substantial gainful activity for at least 12 months or is expected to result in death.
Divorced Spouse Benefit(ex-spouse Social Security benefit)
The Social Security divorced spouse benefit allows a divorced individual to claim up to 50% of their former spouse's Primary Insurance Amount if the marriage lasted at least 10 years, the claimant is currently unmarried, and both parties are at least 62 years old.
Early Retirement Reduction(early claiming reduction)
Early Retirement Reduction is the permanent decrease applied to a Social Security retirement benefit when a worker claims before their Full Retirement Age, reducing the monthly payment by up to 30% for workers with a FRA of 67 who claim at the earliest eligible age of 62.
Early Withdrawal Penalty(10% early withdrawal penalty)
The early withdrawal penalty is a 10% federal tax imposed on distributions taken from most retirement accounts before age 59½, in addition to ordinary income tax owed on the distribution amount.
Employee Stock Ownership Plan (ESOP)(ESOP)
An employee stock ownership plan (ESOP) is a qualified retirement plan that invests primarily in the stock of the sponsoring employer, providing employees with an ownership stake in the company and offering significant tax advantages to both the company and its shareholders.
Employer Match(401(k) match)
An employer match is a contribution made by an employer into an employee's retirement account that is tied to the employee's own contributions, effectively providing additional compensation contingent on the employee's participation in the plan.
Fiduciary Rule(fiduciary standard)
The fiduciary rule in the retirement context refers to the legal standard requiring financial advisers and other service providers to act in the best interest of retirement plan participants and IRA owners when making investment recommendations, placing the client's interests above the adviser's own financial interests.
File and Suspend (historical)(file and suspend strategy)
File and suspend was a Social Security claiming strategy, available prior to May 2016, in which a worker at or past Full Retirement Age filed for retirement benefits and immediately suspended them, allowing a spouse to collect a spousal benefit while the primary worker continued accruing Delayed Retirement Credits.
Fixed Annuity(MYGA)
A fixed annuity is an insurance contract that credits interest at a guaranteed minimum rate during the accumulation phase and provides predictable, level income payments during the distribution phase.
Full Retirement Age(FRA)
Full Retirement Age (FRA) is the age defined by the Social Security Administration at which a worker becomes entitled to receive 100% of their calculated Social Security retirement benefit, with the specific age ranging from 65 to 67 depending on the year of birth.
Government Pension Offset(GPO)
The Government Pension Offset (GPO) was a Social Security Administration provision that reduced Social Security spousal or survivor benefits received by individuals who also collected a government pension from employment not covered by Social Security, before its repeal by the Social Security Fairness Act signed in January 2025.
Hardship Withdrawal(hardship distribution)
A Hardship Withdrawal is a distribution from a 401(k) or 403(b) plan taken while the participant is still employed, allowed by the plan document when the participant has an immediate and heavy financial need that cannot be satisfied through other available resources. Hardship withdrawals are taxable as ordinary income and, for participants under age 59-1/2, are generally subject to the 10% early withdrawal penalty, with limited exceptions.
HSA (Health Savings Account)(HSA)
A Health Savings Account (HSA) is a tax-advantaged account available to individuals enrolled in a high-deductible health plan (HDHP) that can be used to pay for qualified medical expenses, and doubles as a powerful stealth retirement account.
Immediate Annuity(SPIA)
An immediate annuity is an insurance contract purchased with a single premium that begins making income payments to the annuitant within one payment period — typically within 30 days to one year — of the contract's issue date.
In-Plan Roth Conversion(in-plan Roth rollover)
An In-Plan Roth Conversion is a plan feature authorized under IRC Section 402A(c)(4) that allows a participant to convert eligible pre-tax or after-tax 401(k) balances to designated Roth status within the same plan, triggering ordinary income tax on any pre-tax amounts converted in the year of conversion. The converted balance then grows tax-free and can be distributed tax-free in retirement, subject to the five-year holding period and age requirements applicable to Roth accounts.
In-Service Distribution(in-service withdrawal)
An in-service distribution is a withdrawal taken from an employer-sponsored retirement plan, such as a 401(k) or pension plan, while the participant is still actively employed by the plan sponsor, as permitted under specific plan provisions and IRS rules.
Keogh Plan(Keogh)
A Keogh Plan is a tax-deferred retirement savings vehicle for self-employed individuals and unincorporated businesses, authorized under IRC Section 401. Named after Congressman Eugene Keogh who sponsored the legislation in 1962, Keogh plans encompass both defined contribution structures (profit-sharing and money purchase plans) and defined benefit structures, and can allow substantially higher contributions than IRAs, making them an important tool for sole proprietors, partners, and independent contractors.
Longevity Risk(lifespan risk)
Longevity risk is the possibility that an individual will outlive their financial assets, arising from uncertainty about how long a retiree will live and the consequent risk that retirement savings will be exhausted before death.
Lump Sum vs Annuity (Pension)(pension lump sum option)
The lump sum versus annuity pension election is the choice offered by some defined benefit plans between receiving the present value of accrued benefits as a single upfront cash payment or receiving a stream of monthly annuity payments for life, each option carrying distinct financial, tax, and longevity risk implications.
Maximum Taxable Earnings (Social Security)(Social Security wage base)
The Social Security maximum taxable earnings limit is the annual wage ceiling above which earnings are not subject to the Social Security payroll tax (OASDI) and are not credited toward a worker's benefit calculation, set at $168,600 for 2024 and adjusted annually with national wage growth.
Medicare IRMAA(IRMAA)
Medicare IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to standard Medicare Part B and Part D premiums for beneficiaries whose modified adjusted gross income exceeds certain thresholds, causing higher-income retirees to pay significantly more for Medicare coverage than lower-income counterparts.
Mega Backdoor Roth(mega backdoor Roth 401(k))
The mega backdoor Roth is an advanced strategy that allows 401(k) participants whose plan permits after-tax contributions and in-service distributions to move up to tens of thousands of additional after-tax dollars into a Roth account each year.
Money Purchase Plan(money purchase pension plan)
A Money Purchase Plan is a type of IRS-qualified defined contribution plan under IRC Section 401(a) in which the employer is required to make a fixed annual contribution equal to a specified percentage of each eligible employee's compensation, regardless of company profitability. The mandatory nature of the contribution obligation distinguishes money purchase plans from profit-sharing plans, which allow discretionary contributions.
Multiemployer Pension Plan(Taft-Hartley pension plan)
A multiemployer pension plan is a collectively bargained defined benefit plan maintained by two or more unrelated employers under a single trust, typically in industries with mobile workforces — such as construction, trucking, and entertainment — where workers move among multiple employers over their careers.
Net Unrealized Appreciation(NUA)
Net Unrealized Appreciation (NUA) is the difference between the cost basis of employer stock held in a 401(k) and its fair market value at the time of distribution, which can be taxed at favorable long-term capital gains rates rather than ordinary income tax rates if specific conditions are met.
PBGC Premiums(Pension Benefit Guaranty Corporation premiums)
PBGC premiums are annual fees paid by sponsors of ERISA-covered defined benefit pension plans to the Pension Benefit Guaranty Corporation, a federal agency that insures pension benefits up to statutory limits when a plan sponsor becomes insolvent and cannot fund promised benefits.
Pension(traditional pension)
A pension is a retirement income arrangement, most commonly a defined benefit plan, under which an employer promises to pay former employees a regular income for life beginning at retirement, funded through contributions made during the employee's working years.
Pension Buyout(pension lump sum buyout)
A pension buyout is an offer made by a corporate employer or pension plan sponsor to current employees, former employees, or retirees with accrued defined benefit pension rights to accept a lump sum cash payment in exchange for permanently surrendering their right to future monthly pension payments.
Pension Maximization(pension max strategy)
Pension maximization is a retirement income strategy in which a pensioner elects the highest single life annuity payout from their defined benefit pension rather than a reduced joint-and-survivor option, and then uses the income difference to purchase private life insurance that would replace pension income for a surviving spouse.
Pension Risk Transfer(pension de-risking)
Pension risk transfer (PRT) describes strategies by which a defined benefit plan sponsor reduces or eliminates its financial exposure to future pension obligations, most commonly through purchasing group annuity contracts from an insurance company or offering lump-sum buyouts to plan participants.
Plan Loan(401(k) loan)
A plan loan is a provision in many 401(k) and other qualified retirement plans that allows participants to borrow from their own vested account balance, subject to IRS limits and repayment requirements, without incurring income tax or the 10% early withdrawal penalty at the time of borrowing.
Primary Insurance Amount(PIA)
The Primary Insurance Amount (PIA) is the monthly Social Security retirement benefit a worker would receive if they claim at exactly their Full Retirement Age, calculated by the Social Security Administration using a progressive formula applied to the worker's Average Indexed Monthly Earnings.
Profit-Sharing Plan(PS plan)
A profit-sharing plan is a type of defined contribution retirement plan in which an employer makes discretionary contributions to employee accounts, typically based on company profits, though contributions need not be tied to profitability and can be made in any year.
Provisional Income(combined income Social Security)
Provisional income is the IRS measure used to determine what portion of Social Security benefits is subject to federal income tax, calculated as adjusted gross income plus tax-exempt interest plus 50% of total Social Security benefits received during the year.
QDRO(Qualified Domestic Relations Order)
A Qualified Domestic Relations Order (QDRO) is a court order, issued as part of a divorce or separation proceeding, that assigns a portion of a participant's ERISA-qualified retirement plan benefits to an alternate payee — typically a spouse, former spouse, child, or dependent — without triggering the plan's anti-alienation protections.
Qualified Distribution(qualified Roth distribution)
A qualified distribution is a withdrawal from a Roth IRA or Roth account that meets IRS requirements for being entirely free of federal income tax and the 10% early withdrawal penalty.
Qualified Longevity Annuity Contract(QLAC)
A qualified longevity annuity contract (QLAC) is a special type of deferred income annuity that can be purchased inside a traditional IRA or employer-sponsored retirement plan, allowing the annuity's value to be excluded from required minimum distribution calculations until income payments begin, at a maximum start date of age 85.
Rabbi Trust(grantor trust (deferred compensation))
A rabbi trust is an irrevocable grantor trust established by an employer to hold assets set aside to fund nonqualified deferred compensation obligations, providing employees with a measure of security against the employer's unwillingness to pay while remaining subject to the claims of the employer's creditors in insolvency.
Required Beginning Date(RBD)
The required beginning date (RBD) is the IRS deadline by which a retirement account owner must begin taking required minimum distributions, currently set at April 1 of the year following the year in which the account owner reaches age 73 for most retirement plan types.
Required Minimum Distribution(RMD)
A Required Minimum Distribution (RMD) is the minimum amount the IRS mandates that holders of Traditional IRAs, 401(k)s, and most other pre-tax retirement accounts withdraw annually beginning at a specified age.
Restricted Application (historical)(restricted Social Security application)
Restricted application was a Social Security claiming strategy, available to those born before January 2, 1954, in which a person at or past Full Retirement Age filed specifically for spousal or divorced spouse benefits only, while their own earned benefit continued to accumulate Delayed Retirement Credits until age 70.
Retirement Earnings Test(RET)
The Social Security Retirement Earnings Test (RET) temporarily withholds a portion of Social Security benefits for beneficiaries who claim before Full Retirement Age and continue to earn wages above an annual exempt amount, with withheld benefits later recredited in the form of a higher monthly payment at FRA.
Rollover IRA(rollover IRA)
A Rollover IRA is a Traditional IRA that receives assets transferred from an employer-sponsored retirement plan such as a 401(k) or 403(b), typically when an employee leaves a job, allowing the funds to continue growing tax-deferred.
Roth Conversion(IRA conversion)
A Roth conversion is the process of moving funds from a Traditional IRA, 401(k), or other pre-tax retirement account into a Roth IRA, triggering income tax on the converted amount in exchange for future tax-free growth and withdrawals.
Roth IRA(Roth Individual Retirement Account)
A Roth IRA is an individual retirement account funded with after-tax dollars, offering tax-free growth and tax-free qualified withdrawals in retirement, with no required minimum distributions during the owner's lifetime.
Rule of 55(age-55 exception)
The Rule of 55 is an IRS provision that allows employees who separate from service at age 55 or older to take penalty-free distributions from their current employer's 401(k) or 403(b) plan without incurring the standard 10% early withdrawal penalty.
Safe Harbor 401(k)(safe harbor 401k)
A Safe Harbor 401(k) is a 401(k) plan design under IRC Section 401(k)(12) that automatically satisfies the ADP and ACP nondiscrimination tests by requiring mandatory employer contributions that vest immediately. By meeting the safe harbor requirements, a plan sponsor is relieved of the annual compliance testing burden and can allow highly compensated employees to defer the maximum amount without risk of contribution refunds resulting from a failed test.
Saver's Credit(Retirement Savings Contributions Credit)
The Saver's Credit, formally known as the Retirement Savings Contributions Credit, is a non-refundable federal tax credit available to low- and moderate-income individuals who make contributions to qualifying retirement accounts, providing a direct reduction in federal income tax owed.
SECURE Act(SECURE Act 2.0)
The SECURE Act (Setting Every Community Up for Retirement Enhancement) is landmark U.S. retirement legislation enacted in 2019 and expanded in 2022 (SECURE Act 2.0) that made sweeping changes to RMD ages, IRA contribution rules, inherited IRA treatment, and automatic enrollment requirements.
SEP IRA(SEP IRA)
A SEP IRA (Simplified Employee Pension IRA) is a retirement plan designed for self-employed individuals and small business owners, allowing contributions of up to 25% of compensation with a much higher dollar ceiling than standard IRAs.
Sequence of Returns Risk(sequence risk)
Sequence of returns risk is the danger that the timing of portfolio withdrawals — specifically, experiencing poor investment returns early in retirement — will permanently impair a retirement portfolio even if the long-term average return is adequate.
SIMPLE 401(k)(SIMPLE 401(k))
A SIMPLE 401(k) is a simplified defined contribution retirement plan available to employers with 100 or fewer employees under IRC Section 401(k)(11). It combines the employee deferral feature of a standard 401(k) with mandatory employer contributions similar to those required under a SIMPLE IRA, while eliminating the need for complex nondiscrimination testing. The trade-off is that the plan is subject to employer contribution requirements and lower deferral limits than a full-feature 401(k).
SIMPLE IRA(SIMPLE IRA)
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a retirement plan for businesses with 100 or fewer employees that allows both employee salary deferrals and mandatory employer contributions, with easier administration than a 401(k).
Single Life vs Joint Life Pension(joint and survivor annuity)
The single life versus joint life pension election is the fundamental payout choice offered to retiring defined benefit plan participants, selecting between a higher monthly benefit that ends at the retiree's death (single life) and a lower monthly benefit that continues partially or fully to a surviving spouse (joint life).
Social Security(Social Security retirement benefit)
Social Security is a federal insurance program that provides retirement, disability, and survivor benefits to eligible workers and their families, funded through payroll taxes and representing the single largest source of retirement income for most Americans.
Social Security Earnings Test(Social Security retirement earnings test)
The Social Security earnings test reduces Social Security retirement benefits for recipients who are below full retirement age and continue to work, withholding a portion of benefits when earned income exceeds an annual exempt amount — though withheld benefits are credited back as higher payments once the recipient reaches full retirement age.
Solo 401(k)(Individual 401(k))
A Solo 401(k) — also called an Individual 401(k) or Self-Employed 401(k) — is a retirement savings plan available to self-employed individuals and small business owners with no full-time employees other than the owner and a spouse, offering the same tax advantages as a corporate 401(k) with significantly higher contribution limits than an IRA or SEP IRA.
Spousal Benefit (Social Security)(spouse benefit Social Security)
The Social Security spousal benefit allows a married individual who is currently married to a Social Security-eligible worker to receive up to 50% of their spouse's Primary Insurance Amount, even if the claimant has limited or no Social Security earnings history of their own.
Spousal IRA(Kay Bailey Hutchison Spousal IRA)
A spousal IRA is a Traditional or Roth IRA funded on behalf of a spouse who has little or no earned income, allowing a working spouse's earnings to support IRA contributions for both spouses, effectively doubling the couple's annual IRA contribution capacity.
Stretch IRA (pre-SECURE)(stretch IRA)
The Stretch IRA was an estate planning strategy, available under pre-SECURE Act law, that allowed a non-spouse IRA beneficiary to take Required Minimum Distributions from an inherited IRA over their own life expectancy rather than over the deceased owner's remaining life expectancy. By stretching distributions over decades, younger beneficiaries could dramatically extend tax-deferred growth within the inherited account, transforming a retirement savings vehicle into a multigenerational wealth transfer tool.
Substantially Equal Periodic Payments(SEPP)
Substantially equal periodic payments (SEPP) is an IRS provision under IRC Section 72(t) that allows retirement account owners to take a series of calculated distributions before age 59½ without incurring the standard 10% early withdrawal penalty, provided the payments follow one of three IRS-approved calculation methods and continue for at least five years or until the owner reaches age 59½, whichever is later.
Substantially Equal Periodic Payments (SEPP)(SEPP)
Substantially Equal Periodic Payments (SEPP) is an IRS-approved exception under IRC Section 72(t) that allows an IRA owner or qualified plan participant who is under age 59-1/2 to take a series of distributions from their retirement account without incurring the 10% early withdrawal penalty, provided the payments are calculated using one of three IRS-approved methods and are continued without modification for the longer of five years or until the participant reaches age 59-1/2.
Supplemental Executive Retirement Plan(SERP)
A Supplemental Executive Retirement Plan (SERP) is a nonqualified deferred compensation arrangement that provides senior executives with retirement benefits above and beyond those available under tax-qualified plans, typically designed to restore the benefits lost due to IRS compensation and benefit limits on qualified plans.
Supplemental Security Income (SSI)(SSI)
Supplemental Security Income (SSI) is a federal needs-based cash assistance program administered by the Social Security Administration that provides monthly payments to aged, blind, or disabled individuals with very limited income and resources, funded by general tax revenues rather than Social Security payroll taxes.
Survivor Benefit (Social Security)(widow benefit Social Security)
The Social Security survivor benefit provides monthly payments to the eligible surviving spouse, children, or dependent parents of a deceased worker who had accumulated sufficient Social Security credits, with the surviving spouse able to receive up to 100% of the deceased worker's benefit amount.
Target Date Fund(lifecycle fund)
A target date fund is an all-in-one mutual fund designed for retirement saving that automatically shifts its asset allocation from aggressive to conservative as the investor approaches a selected target retirement year.
Taxation of Social Security Benefits(Social Security tax)
The taxation of Social Security benefits is the federal income tax treatment of monthly Social Security payments, under which up to 85% of benefits may be included in taxable income depending on a beneficiary's provisional income relative to IRS-defined thresholds.
Thrift Savings Plan (TSP)(TSP)
The Thrift Savings Plan (TSP) is a defined contribution retirement savings plan for federal government employees and members of the uniformed services, administered by the Federal Retirement Thrift Investment Board and offering investment options similar to a 401(k) with notably low expense ratios.
Traditional IRA(IRA)
A Traditional IRA is an individual retirement account that allows eligible individuals to make potentially tax-deductible contributions, with investment gains growing tax-deferred until withdrawn in retirement.
Variable Annuity(VA)
A variable annuity is an insurance contract that allows the owner to allocate premiums among a selection of investment sub-accounts, with the contract value and future income payments varying based on the performance of those sub-accounts.
Vesting Schedule(cliff vesting)
A vesting schedule is a timeline established by an employer that determines when an employee gains full ownership of employer-contributed retirement benefits, such as matching contributions or profit-sharing allocations.
Windfall Elimination Provision(WEP)
The Windfall Elimination Provision (WEP) was a Social Security Administration formula that reduced the Social Security retirement or disability benefits of workers who spent portions of their careers in employment not covered by Social Security while also earning enough Social Security-covered credits to qualify for benefits, before its repeal by the Social Security Fairness Act in January 2025.