FPSB Retirement & Tax Specialist key terms

The rate applied to the next unit of income earned, showing how much tax a retiree saves or pays on an additional withdrawal, contribution, or dollar of income.

Total tax owed divided by total taxable income, expressing the overall burden as a percentage rather than the rate on the last dollar.

An income range taxed at a specified statutory rate, with progressive systems applying higher rates to income falling in higher bands.

The portion of income remaining after allowable exclusions, deductions, and adjustments, on which the applicable tax rates are actually applied.

A fixed amount that reduces taxable income, available without itemizing, commonly adjusted for inflation and varied by filing status and age.

An individually claimed expense, such as qualifying medical costs, charitable gifts, or mortgage interest, that reduces taxable income when claimed instead of the standard amount.

A savings vehicle in which investment earnings are not taxed as they accrue, with tax due when funds are withdrawn later, typically in retirement.

A savings vehicle where qualified withdrawals, including accumulated earnings, escape income tax, often because contributions were made with already-taxed money.

Moving funds from a pre-tax retirement account into a Roth-type account, creating taxable income now in exchange for tax-free qualified withdrawals later.

The minimum amount that must be withdrawn annually from certain tax-deferred retirement accounts once the owner reaches the mandated age, with penalties for shortfalls.

A direct transfer of retirement account funds to a qualifying charity, which can satisfy required minimum distribution obligations while being excluded from gross income.

An employer-sponsored retirement plan promising a specified benefit, usually calculated from salary and years of service, with investment risk borne by the plan sponsor.

A retirement plan holding an individual account for each participant, where the eventual benefit depends on contributions plus investment performance rather than a promised amount.

An employer contribution made when an employee contributes to a workplace retirement plan, often a set percentage of pay or a partial match of employee deferrals.

The maximum amount that may be contributed to a retirement account in a given period under tax rules, sometimes with catch-up amounts for older savers.

An additional contribution permitted for participants above a specified age, allowing them to save more than the standard annual limit in qualified retirement accounts.

The schedule by which an employee gains non-forfeitable ownership of employer-provided retirement contributions, often requiring a period of service.

The method used to calculate a defined benefit payment, commonly combining a service factor, an earnings measure, and years of credited employment.

Payment of an entire retirement benefit or account balance in one amount rather than as periodic income, often raising complex tax and reinvestment decisions.

A contract, typically with an insurer, that converts accumulated capital into a stream of payments, sometimes for life, transferring longevity risk to the issuer.

The risk that a person outlives their financial resources, requiring planning for an uncertain lifespan and potentially higher late-life spending.

A planning estimate of the percentage of a portfolio that can be withdrawn annually with low risk of depletion over a chosen retirement horizon.

The danger that poor investment returns occurring early in retirement, while withdrawals are being taken, permanently impair a portfolio more than later losses would.

The risk that rising prices erode the purchasing power of fixed income and savings, reducing real retirement spending capacity over time.

The possibility that investment values decline due to broad market movements, affecting account balances and the sustainability of retirement withdrawals.

The division of a portfolio among asset classes such as equities, bonds, and cash, a primary driver of both expected return and volatility.

A planned, gradual shift in asset mix over time, typically reducing equity exposure as a target retirement date approaches or as a retiree ages.

Periodically realigning portfolio holdings back to target weights after market movements shift the mix, helping control risk and sometimes triggering taxable gains.

Investment return after subtracting inflation, indicating the actual growth in purchasing power achieved by savings over a period.

The stated investment return before adjusting for inflation, which overstates the increase in real spending power during periods of rising prices.

Moving retirement funds from one account or plan to another while preserving tax deferral, provided the transfer meets applicable rules and deadlines.

Tax levied on the profit from selling an appreciated asset, often at preferential rates for long-held assets and sometimes deferred until realization.

Selling investments at a loss to offset realized gains or ordinary income, subject to rules limiting wash-sale repurchases and deduction amounts.

A tax imposed on the transfer of a deceased person's assets above an exemption threshold, with rates and rules varying by jurisdiction.

A tax charged to the recipient of inherited property, distinct from an estate tax levied on the deceased person's overall holdings.

A rule resetting the cost basis of inherited assets to their value at death, reducing capital gains tax when heirs later sell.

A written instruction naming who receives account or policy proceeds at death, generally overriding a will for those assets.

The age at which a person starts retirement benefits, which affects the monthly amount through early-claiming reductions or delayed-claiming increases.

The reference age set by Social Security rules at which unreduced retirement benefits become payable, varying by birth year.