Glossary

Every acronym and technical term used in RetireTaxGuide, in plain English. Grouped by topic — taxes, retirement income, and investing.

Tax terms

AGI — Adjusted Gross Income: Total income minus specific adjustments (retirement contributions, HSA contributions, half of self-employment tax). The starting point for most tax math.
MAGI — Modified Adjusted Gross Income: AGI plus a few add-backs (e.g. tax-exempt interest, untaxed Social Security). IRMAA tiers, ACA subsidies, and NIIT all key off MAGI, not AGI.
Marginal vs. effective rate: Your marginal rate is the tax on the next dollar earned; your effective rate is total tax divided by total income. The planner optimizes marginal rates and reports effective ones.
Bracket-fill: Deliberately realizing income (Roth conversions, gain harvests) up to the top of a chosen tax bracket — filling cheap buckets before RMDs force expensive ones later.
Headroom: Dollars of room left before the next guardrail trips — the next bracket, IRMAA tier, ACA cliff, or SS torpedo step. The Tax Planner's headline answer.
RMD — Required Minimum Distribution: Yearly withdrawals the IRS forces from pre-tax accounts starting at 73 (75 if born 1960+). Miss one and the penalty is steep.
IRMAA — Income-Related Monthly Adjustment Amount: Medicare premium surcharges for higher earners, based on MAGI from two years earlier. Crossing a threshold by $1 can jump premiums for a full year.
NIIT — Net Investment Income Tax: A 3.8% surtax on investment income above $200k single / $250k joint.
QCD — Qualified Charitable Distribution: Direct transfers from an IRA to a charity after age 70½. Counts toward RMDs but never enters taxable income.
LTCG / ST gains — Long-/Short-Term Capital Gains: Profits on sold assets held over a year (LTCG, taxed at 0/15/20%) vs. a year or less (ST, taxed as ordinary income).
Carryforward (capital loss): Losses beyond the annual $3,000 ordinary-income offset carry into future years. The planner tracks the balance automatically.
Cost basis: What you originally paid for an asset (plus reinvestments). Gain equals sale price minus basis — only the gain is taxed.
Step-up in basis: Heirs generally inherit assets at current market value, wiping out unrealized gains. Relevant to legacy planning.
Provisional income: The Social Security taxation formula's income measure: AGI plus tax-exempt interest plus half of SS benefits. Cross $25k/$32k and $34k/$44k (single/joint) and more of your SS becomes taxable.
SS torpedo (tax torpedo): The phase-in where each extra dollar of income drags more Social Security into taxation, creating hidden 25–40%+ marginal rates inside the 50%/85% tiers.
Widow trap: The tax jump when a surviving spouse files Single: narrower brackets on similar income, often plus higher IRMAA.
PTC — Premium Tax Credit (ACA subsidy): Government help paying marketplace premiums before Medicare, sized from your benchmark plan price and income as a share of poverty level.
FPL — Federal Poverty Level: The income yardstick ACA subsidies use (varies by household size, indexed yearly). Subsidy bands are quoted as multiples like 150% or 400% of FPL.
Benchmark (silver) plan: The second-lowest-cost silver plan in your ZIP — the reference price your ACA subsidy is computed from. You enter it manually.
FICA — Payroll tax: Social Security (6.2% to the wage base) plus Medicare (1.45%) taken from wages. Separate from income tax, shown separately everywhere.
OBBBA senior deduction: The 2025 reconciliation law's extra deduction for filers 65+, modeled in current-year federal tax.

Retirement accounts & income

401(k) / 403(b): Employer pre-tax accounts. Contributions cut taxable wages; withdrawals are ordinary income with RMDs.
Traditional IRA: Personal pre-tax account with the same tax treatment as a 401(k) and the same RMDs.
Roth IRA / Roth 401(k): After-tax accounts: no deduction going in, tax-free coming out, no RMDs for the owner. The destination of Roth conversions.
Roth conversion: Moving pre-tax money into Roth and paying ordinary tax now to buy tax-free growth and shrink future RMDs.
HSA — Health Savings Account: Triple-advantaged account (deductible in, tax-free growth, tax-free out for medical costs) available with high-deductible health plans.
NQDC — Nonqualified Deferred Compensation: Employer promises that pay out on a fixed, nearly irrevocable schedule. Fully ordinary income when paid; never convertible or RMD-eligible.
PIA — Primary Insurance Amount: Your Social Security benefit at full retirement age, computed from lifetime earnings. Every SS amount in the app derives from it.
FRA — Full Retirement Age: 66–67 depending on birth year. Claim at 62 for ~30% less for life; wait to 70 for ~30% more, plus spousal and survivor effects.
COLA — Cost-of-Living Adjustment: Yearly raise applied to Social Security, pensions, and other incomes. Each income carries its own COLA %.
Bend points: The two kink points in the Social Security formula where each extra dollar of average earnings buys a smaller benefit. They make the system progressive.
Spousal / survivor benefits: Married and widowed filers may claim on a spouse's record (up to 50% while living, up to 100% as a survivor) — often beating their own benefit.
MFJ — Married Filing Jointly: The joint filing status with wider brackets and a larger standard deduction than Single. Survivor years flip to Single brackets — the "widow trap."
Catch-up contributions: Extra contribution room at 50+ (larger at 60–63 under SECURE 2.0), modeled against real IRS limits.
SECURE 2.0: The 2022 retirement law behind RMD ages 73/75, higher catch-ups, and related rules used throughout the app.

Investing & markets

CPI — Consumer Price Index: General inflation. Expenses grow with it, and "today's dollars" means CPI-deflated values.
TIPS — Treasury Inflation-Protected Securities: Bonds whose principal tracks CPI. One of the four holding asset types.
Volatility: How much returns swing year to year (standard deviation). Affects Monte Carlo spread, never the base projection.
Correlation: How much stocks, bonds, and inflation move together. Bad-market years can coincide with high inflation in the simulation.
Rebalance: Periodically resetting holdings to target allocation (e.g. yearly). Keeps risk from drifting as markets move.
Monte Carlo: Thousands of randomized futures drawn from your return/volatility assumptions. The odds view of your plan.
Block Bootstrap: A Monte Carlo mode that replays real 12-month market-history chunks instead of random draws, preserving real crash-and-recovery shapes.
Backtest: Replaying your plan through actual 1871–2025 market history (Shiller data) from every possible start year.
Drawdown: Peak-to-trough portfolio fall, reported per historical window in the trial replay table.
Sequence risk: The danger that bad returns arrive early in retirement, when withdrawals amplify the damage. Measured as p10 vs. median legacy.
Legacy: What remains at plan end — the bequest. Reported as median, p10/p90, and per-outcome-bucket.