Plain-English definitions for the terms you'll encounter on your financial journey.
An annual marketing or distribution fee on a mutual fund used to pay for promotion and broker commissions.
A withdrawal from a 529 plan used to pay for eligible education costs, ensuring the money remains tax-free.
The age at which individuals are generally allowed to begin taking distributions from retirement accounts without a tax penalty.
The time limit allowed by the IRS to complete an indirect rollover before the distribution is taxed and potentially penalized.
A withdrawal of funds or assets from a retirement account, which may be subject to income tax and potential penalties.
A 10% penalty charged by the IRS on most retirement account withdrawals made before the account owner reaches age 59 1/2.
A distribution from a 401(k) or similar plan due to an immediate and heavy financial need, such as medical bills or preventing eviction.
An emergency distribution from a retirement plan allowed for an immediate and heavy financial need, such as medical bills or preventing eviction.
A distribution taken from an employer-sponsored retirement plan while the employee is still working for that company.
The state of dying without a valid will, which leads to the distribution of assets according to state laws.
Last Will and Testament — A legal document that communicates a person's final wishes regarding the distribution of their property and the care of any minor children.
A legal arrangement created during an individual's lifetime that holds assets for their benefit and dictates their distribution after death.
A one-time payment of the entire balance of a retirement account or pension instead of receiving periodic payments.
A method of distribution where each living beneficiary receives an equal share.
A Qualified Charitable Distribution is a way for people over 70 and a half to send money directly from their retirement account to a charity. Because the money never touches your personal bank account, you do not have to pay income taxes on that donation.
A trust designed to provide income for a surviving spouse while allowing the grantor to control the final distribution of assets.
A Required Minimum Distribution is the government-mandated amount of money that people must withdraw from their traditional retirement accounts each year once they reach a certain age. The goal is to ensure that people eventually pay taxes on the money they set aside in tax-advantaged accounts during their working years.
An IRS provision allowing employees who leave their job at age 55 or older to take penalty-free distributions from their current 401(k).
Federal legislation passed in 2019 that changed many retirement rules, such as raising the age for starting required distributions.
The study of the economic systems and incentives that govern the supply, demand, and distribution of a specific cryptocurrency token.
A payment from a retirement plan that is eligible to be moved to another tax-advantaged account without being immediately taxed.