Reference
Retirement money glossary
Retirement accounts come with a lot of jargon. Here are short, plain-English definitions of the terms you are most likely to see, with links to guides that explain them in more depth.
- 401(k)
- A retirement savings plan offered by an employer. You contribute from your paycheck, often with a matching contribution from your employer, and the money grows tax-deferred (or tax-free in a Roth 401(k)). See your choices for an old 401(k).
- 403(b)
- A retirement plan similar to a 401(k), offered by public schools, hospitals, and many nonprofit organizations. Many of the same contribution, rollover, and withdrawal rules apply.
- Asset allocation
- How your money is divided among different types of investments, such as stocks, bonds, and cash. Your allocation has a large effect on how much your savings may rise and fall.
- Beneficiary
- The person or organization you name to receive an account when you die. For retirement accounts, the beneficiary form usually controls who inherits, even if your will says something different.
- Bullion
- Gold, silver, or other precious metal valued mainly for its metal content, usually in the form of bars, rounds, or widely traded coins. Bullion tends to sell for a smaller premium over the spot price than collectible coins. See coins vs. bullion.
- Catch-up contribution
- An extra amount people age 50 and older can contribute to a retirement account each year, beyond the normal limit. Some workplace plans allow a higher catch-up amount for people ages 60 to 63. The dollar limits change most years, so check IRS.gov.
- Collectible
- A category the IRS uses for items such as artwork, antiques, and most coins and metals. IRAs generally cannot hold collectibles, but there are exceptions for certain gold, silver, platinum, and palladium coins and bars that meet purity rules.
- Commingled storage
- A way of storing IRA metals where your coins or bars are kept together with those of other customers. You are owed the same type and amount of metal, though not necessarily the exact pieces you bought. It usually costs less than segregated storage.
- Custodian
- The bank, brokerage, or trust company that holds your IRA and handles its records and IRS reporting. A gold IRA needs a self-directed custodian that allows precious metals.
- Depository
- A secure, insured storage facility that holds precious metals for IRAs. The IRS does not allow IRA metals to be kept at home, so a gold IRA's metal is held at a depository.
- Direct rollover
- Moving money from an employer plan, such as a 401(k), straight to an IRA or another plan without the money being paid to you. No tax is withheld and no 60-day deadline applies. See rollover vs. transfer.
- Distribution
- Any money or property taken out of a retirement account. Distributions from traditional accounts are generally taxable income unless they are rolled over.
- Diversification
- Spreading your money across different kinds of investments so that one poor performer has less effect on the whole. It can reduce risk, but it does not prevent losses.
- Early withdrawal penalty
- An extra 10% tax on many retirement account withdrawals taken before age 59½, on top of regular income tax. The IRS lists a number of exceptions, such as the rule of 55 for some workplace plans.
- ETF (exchange-traded fund)
- A fund that holds a basket of investments and trades on a stock exchange like a single stock. Some ETFs hold physical gold, letting you get gold price exposure in a regular brokerage account or IRA. See gold IRA vs. gold ETF.
- Expense ratio
- The yearly fee a mutual fund or ETF charges, shown as a percentage of your investment. It is taken out of the fund's assets, so you do not get a separate bill.
- Fineness
- A measure of how pure a precious metal is, often written as a decimal such as .995 or .9999. IRA-eligible metals must generally meet minimum fineness standards, with a few specific coin exceptions.
- Form 1099-R
- A tax form sent by the account that pays out money from a retirement plan or IRA. It reports the amount distributed and includes a code showing what type of distribution it was, such as a direct rollover.
- Form 5498
- A tax form sent by your IRA custodian that reports contributions, rollovers, and the account's year-end value. It usually arrives in May, after the tax filing deadline.
- Full retirement age
- The age at which you can receive your full Social Security retirement benefit. For people born in 1960 or later, it is 67. Claiming earlier reduces your monthly benefit, and waiting longer, up to 70, increases it.
- Gold IRA
- A self-directed IRA that holds IRS-approved physical gold, and often other precious metals, stored at a depository. It follows the same tax rules as other IRAs. See how a gold IRA works.
- In-kind distribution
- Taking an investment out of a retirement account as-is, instead of selling it for cash first. With a gold IRA, it means having the metal shipped to you. The fair market value is generally taxable from a traditional IRA.
- Indirect rollover
- A rollover where the money is paid to you first, and you deposit it into another retirement account within 60 days. Employer plans must generally withhold 20% from these payments, and IRA-to-IRA indirect rollovers are limited to one per 12 months.
- IRA (individual retirement account)
- A retirement account you open on your own, outside of an employer, at a bank, brokerage, or other custodian. The main types are traditional and Roth.
- Liquidity
- How quickly and cheaply you can turn an asset into cash. Funds that trade on an exchange are generally more liquid than physical metal held in an IRA.
- Markup / spread
- The difference between what a dealer charges you to buy something and what the dealer would pay you to sell it back. For physical gold, this is often one of the biggest costs. See gold IRA fees.
- Medicare
- The federal health insurance program for people 65 and older and for some younger people with disabilities. If you retire before 65, you will usually need other health coverage until Medicare begins.
- Net unrealized appreciation (NUA)
- A tax rule for employer stock held in a 401(k). In some cases, you can move the shares to a regular brokerage account and pay ordinary income tax only on their original cost, with the growth later taxed at capital gains rates. Rolling the stock into an IRA gives up this option.
- Proof coin
- A coin struck with special care to give it a mirror-like finish, usually sold to collectors. Some are IRA-eligible, but they often carry much higher premiums than standard bullion coins. See coins vs. bullion.
- QCD (qualified charitable distribution)
- A payment sent directly from your IRA to a qualified charity, available starting at age 70½. It is generally excluded from your taxable income, can count toward your RMD, and is subject to a yearly limit adjusted for inflation.
- Required minimum distribution (RMD)
- The minimum amount you must withdraw each year from traditional IRAs and most workplace plans once you reach RMD age, currently 73, or 75 for people born in 1960 or later. See our RMD guide.
- Roth 401(k)
- A version of a 401(k) where you contribute after-tax money. Qualified withdrawals, including earnings, are tax-free. Starting in 2024, Roth 401(k)s no longer require RMDs from the owner.
- Roth IRA
- An IRA funded with after-tax money. Qualified withdrawals are tax-free, and there are no RMDs while the original owner is alive.
- Rule of 55
- An IRS exception that lets you take withdrawals without the 10% early withdrawal penalty from the plan of an employer you leave in or after the year you turn 55. It does not apply to IRAs or to plans from earlier jobs.
- Segregated storage
- A way of storing IRA metals where your specific coins or bars are kept separate from everyone else's. It usually costs more than commingled storage.
- Self-directed IRA
- An IRA held by a custodian that allows a wider range of investments than a typical brokerage IRA, such as physical precious metals or real estate. You make the investment decisions, and the custodian handles the account records.
- Sequence-of-returns risk
- The risk that poor investment returns early in retirement, while you are making withdrawals, do lasting damage to your savings. See what a market drop near retirement means.
- Spot price
- The current market price for immediate delivery of a raw metal, usually quoted per troy ounce. Coins and bars sell above spot, and dealers usually buy back below it.
- Traditional IRA
- An IRA where contributions may be tax-deductible and growth is tax-deferred. Withdrawals are generally taxed as ordinary income, and RMDs apply.
- Trustee-to-trustee transfer
- Moving money directly from one IRA custodian to another without it passing through your hands. There is no withholding and no limit on how many you can do in a year.
- Uniform Lifetime Table
- An IRS table of life expectancy factors that most people use to figure their RMD. You divide your prior December 31 account balance by the factor for your age.
- Vesting
- The process of earning full ownership of your employer's contributions to your workplace plan over time. Money you contribute yourself is always fully vested, but unvested employer money may be forfeited if you leave before the plan's vesting schedule is complete.
- Withholding
- Income tax taken out of a payment in advance and sent to the IRS on your behalf. Employer plans must generally withhold 20% from distributions paid to you that could have been rolled over, while IRA withholding is usually 10% unless you choose otherwise.