Personal Finance Glossary F to L: Plain-English Definitions

The free form that opens federal grants, work-study and federal loans, and most state and college aid; the 2027–28 form opened on September 23, 2026, and uses 2025 tax-year income. (Part 4.6)

A state-run insurer of last resort that sells basic property coverage, usually at a higher price, to owners who can’t buy it from regular companies. (Part 8.5)

A scam in which the victim deposits a check for more than is owed and sends back the difference; the check bounces weeks later and the victim repays the bank. (Part 13.2)

The federal law, implemented by the CFPB’s Regulation F, governing third-party debt collectors: validation information, no more than seven calls in seven days about one debt, contact before reporting a debt to a bureau, and an end to contact on written request. (Part 3.8)

Federal deposit insurance covering up to $250,000 per depositor, per insured bank, per ownership category; it covers deposits, not investments bought at a bank. The NCUA insures credit-union shares on the same terms. (Part 2.6)

A legal class of account — single, joint, certain retirement accounts, trust accounts, employee benefit plan, business or government — each insured separately at the same bank; trust deposits are insured at $250,000 per eligible beneficiary, up to $1.25 million per owner. (Part 2.6)

An adviser paid only by the client — a flat fee, an hourly rate or a percentage of assets — and never by product commissions. A “fee-based” adviser charges advisory fees plus some commissions, so both sets of conflicts apply. (Part 7.9)

Social Security (6.2%, up to the $184,500 2026 wage base) and Medicare (1.45%, uncapped) payroll taxes. (Part 1.6)

The dominant credit scoring model, weighted 35% payment history, 30% amounts owed, 15% length of history, 10% new credit, 10% credit mix. (Part 3.1)

A registered investment adviser’s legal duty of care and loyalty to the client under the Investment Advisers Act of 1940, covering the whole advisory relationship; its scope can be shaped by agreement, but the duty cannot be waived. Compare Regulation Best Interest. (Part 7.9)

Single, married filing jointly, married filing separately, or head of household — sets which tax bracket table and standard deduction apply. (Part 9.2)

The FBI IC3 Recovery Asset Team’s process for asking banks to freeze fraudulent transfers still in transit. (Part 13.5)

An annuity whose returns are linked to a stock index, with a floor (often 0%) and a cap or participation rate limiting the upside; crediting formulas are complex, and surrender charges are common. (Part 10.10)

A retirement-income design that covers essential spending with income that cannot fall with markets (Social Security, a pension, an annuity, a Treasury ladder) and pays discretionary spending from the invested portfolio. (Part 10.7)

Federal law giving eligible employees of covered employers up to 12 workweeks of unpaid, job-protected leave in 12 months, including to care for a parent with a serious health condition. (Part 11.6)

The annual return a one-participant 401(k) must file once plan assets (counting the employer’s other one-participant plans) exceed $250,000 at the end of a plan year, and for the plan’s final year. Late filing can cost $250 a day, up to $150,000 a return, unless the IRS penalty relief program is used. (Part 6.8)

The short relationship summary SEC-registered advisers and broker-dealers must give retail investors, covering services, fees, conflicts and disciplinary history; read alongside an adviser’s Form ADV Part 2 and a FINRA BrokerCheck search. (Part 7.9)

The form that tells your employer how much federal income tax to withhold — it changes withholding, not what you owe; the 2026 form has five steps, and Step 4 handles other income, extra deductions and extra withholding. (Parts 1.7 and 9.3)

A free notice on your credit file telling lenders to verify your identity before opening credit; placed with one bureau, which must notify the other two, and lasting one year (seven with an identity theft report). Weaker than a credit freeze. (Part 13.3)

A pre-tax account for healthcare or dependent-care expenses; 2026 limits $3,400 for a health FSA (up to $680 may carry over if the plan allows) and $7,500 per household for dependent care, up from $5,000. (Part 6.6)

What money will grow to: FV = P × (1 + r)ⁿ for a lump sum, or FV = PMT × [(1 + i)ⁿ − 1] ÷ i for equal end-of-period deposits — $500 a month for 30 years at 7% gives $609,986. (Part 7.1)

Auto coverage that pays the difference between the loan balance and the insurer’s actual-cash-value payout if the car is totaled or stolen; it earns its cost only while the loan is underwater. (Part 3.9)

The window from January 1 to March 31 each year when people who missed their Medicare enrollment windows can sign up for Part B, with coverage starting the month after sign-up and any late-enrollment penalty applied. (Part 10.9)

A target-date fund’s schedule for shifting from stock-heavy toward bond-heavy as its target year approaches; a “to” path stops at the target year, a “through” path keeps reducing stock for years after. (Part 7.8)

The window in which a credit card balance can be paid in full with no interest charged on that month’s purchases. (Part 3.3)

A vesting schedule where ownership of employer contributions increases gradually — by law reaching 100% no later than year six of service for 401(k)-type plans (year seven for a defined-benefit pension). (Parts 6.7, 10.4)

A trust whose income is taxed to the person who created it, as with a revocable living trust; it files no separate income tax at trust rates. (Part 12.3)

The state safety net that pays annuity and insurance benefits if an insurer fails, up to a limit — at least $250,000 of annuity present value in most states. (Part 10.10)

A flexible withdrawal rule: cut spending 10% if the current withdrawal rate rises more than 20% above the starting rate, raise it 10% if it falls more than 20% below, and skip the inflation raise after a losing year. (Part 10.7)

A lender’s check of your credit report when you apply for credit. It can lower a FICO score for a year and stays on the report for up to two; a soft inquiry, such as checking your own report, never affects the score. (Part 3.2)

A health plan meeting federal deductible and out-of-pocket limits that qualifies its holder to contribute to an HSA; for 2026, a deductible of at least $1,700 self-only / $3,400 family and an out-of-pocket maximum no higher than $8,500 / $17,000. (Parts 6.6 and 8.2)

Home Equity Line of Credit — a revolving credit line secured by home equity, typically variable-rate. (Part 5.7)

A savings account, usually at an online bank, paying close to market rates — about 4% APY in early September 2026 against an FDIC national average of 0.37% (Sep 2026); the rate is variable and the account is insured like any deposit. (Part 2.7)

A signed form allowing health providers and insurers to share a person’s medical information with someone they name; it gives no decision-making power. (Part 11.6)

The standard homeowners insurance form, with six coverages: dwelling (A), other structures (B), personal property (C), loss of use (D), personal liability (E) and medical payments to others (F). It settles the house at replacement cost and belongings at actual cash value unless endorsed. (Part 8.5)

Holding mostly domestic stocks, or one’s employer’s stock, instead of a globally diversified portfolio. (Part 7.7)

The only account with tax advantages at contribution, growth, and qualified withdrawal all at once — the “triple tax advantage”; 2026 limits $4,400 self-only / $8,750 family, plus $1,000 at 55 or older; no new contributions once enrolled in Medicare. (Parts 6.6 and 10.9)

Life insurance or an annuity with a long-term care rider; premiums are usually fixed and a death benefit goes to heirs if care is never needed, at the cost of less care coverage per dollar. (Part 10.10)

A U.S. Treasury savings bond paying a composite rate — fixed rate + (2 × semiannual inflation) + (fixed rate × semiannual inflation), 4.26% for bonds issued May–Oct 2026; up to $10,000 electronic per person per calendar year, no redemption for 12 months, three months’ interest forfeited before five years, federal tax only. (Part 7.8)

An older income-driven federal student loan plan that survives long-term for loans first disbursed before July 1, 2026; taking any new Direct Loan on or after that date moves all of a borrower’s Direct Loans to the Tiered Standard plan or RAP, ending IBR access. (Part 4.3)

A number the IRS issues that must appear on your tax return, so no one else can file a return using your Social Security number. (Part 13.4)

Meeting a redemption by handing over securities instead of cash. ETFs use it to shed low-basis shares without a taxable sale (26 U.S.C. §852(b)(6)), which is why they rarely distribute capital gains. (Part 7.3)

A lump sum exchanged for a payment that lasts as long as you live; it can pay more than a bond of the same size because of mortality credits — money left by buyers who die early funds those who live long. A single-premium immediate annuity (SPIA) and a deferred income annuity (DIA) are the two forms; a fixed (multi-year guaranteed) annuity is instead a CD-like savings product issued by an insurer. (Part 10.10)

A fund that simply holds every security in a market index, at a fraction of an active fund’s cost. (Part 7.3)

A distribution paid to you that you redeposit in a plan or IRA within 60 days; plan payouts carry 20% mandatory withholding that you must replace from other money, and only one IRA-to-IRA indirect rollover is allowed in any 12 months. (Part 6.7)

The slow loss of what each dollar buys: at 3% inflation, a fixed $40,000 a year buys what $22,147 buys today after 20 years. (Part 10.7)

The seven-month window to sign up for Medicare: the three months before the month you turn 65, that month, and the three months after. (Part 10.9)

A homeowners policy pays full replacement cost only if the dwelling is insured for at least 80% of its rebuilding cost; below that it pays the greater of actual cash value or a proportional share of the repair. (Part 8.5)

The fee a card’s issuing bank collects on a transaction; for debit issuers over $10 billion in assets, capped under Regulation II at 21¢ + 0.05% (plus 1¢ for fraud prevention) — a cap a federal court vacated in August 2025 but stayed pending appeal. (Part 2.2)

The state-law formula that decides asset distribution when someone dies without a valid will. (Part 12.1)

A short written plan — target allocation, contributions, rebalancing rule and what to do in a market decline — drafted in calm markets to guide decisions in volatile ones. (Part 7.7)

The difference between a fund’s reported return and the dollar-weighted return its investors actually earned, given when and how much they bought and sold. Morningstar put it at 1.2 percentage points a year for U.S. funds over the decade to 2025. (Part 7.7)

The rate the Federal Reserve pays banks on money held at the Fed, a risk-free alternative to paying depositors; 3.90% from September 17, 2026. (Part 2.7)

A retirement account opened independently of an employer; 2026 limit $7,500 (or taxable compensation, if less), plus a $1,100 catch-up at 50 or older. (Part 6.4)

Surcharges on Medicare Part B and D premiums once MAGI from two years earlier exceeds $109,000 single / $218,000 joint (2026); the tiers are cliffs, and a life-changing event such as retirement can be reported on form SSA-44. (Part 10.9)

An irrevocable trust that owns life insurance so the death benefit stays outside the insured’s taxable estate; an existing policy transferred to it is pulled back if the insured dies within three years. (Part 12.3)

A trust that permanently moves assets out of the grantor’s estate, used for estate-tax reduction or asset protection. (Part 12.3)

Specific deductible expenses claimed instead of the standard deduction, whichever produces the larger benefit. (Part 9.2)

A pension payout that continues to a surviving spouse (50%–100% of the original amount) in exchange for a smaller payment while both are alive; the legal default for married participants unless the spouse consents in writing to another option. (Part 10.4)

The rule that taxes a child’s unearned income above a threshold ($2,700 in 2026) at the parent’s rate; it applies to children under 18, to 18-year-olds whose earned income is no more than half their support, and to full-time students aged 19 to 23 under the same support test. (Part 12.5)

The rule that treats anyone HSA-eligible on December 1 as eligible for the whole year, allowing a full year’s contribution. The person must then stay eligible through December 31 of the following year, or the extra contribution becomes taxable income plus a 10% additional tax. (Part 6.2)

Coverage for damage or injury to others only, leaving the policyholder’s own vehicle unprotected; the minimum required in nearly every state. (Part 8.6)

The order in which loans secured by a home are repaid from a sale or foreclosure, generally by recording date. A home equity lender behind the first mortgage is paid only from what is left, which is why second-lien rates are higher. (Part 5.7)

A nonrefundable credit of 20% of the first $10,000 of education expenses, up to $2,000 per return, with no limit on years and covering graduate study and job-skills courses; same phase-out as the AOTC, and not claimable with it for the same student in the same year. (Part 4.6)

A health flexible spending account restricted to expenses such as dental and vision care. Unlike a general-purpose health FSA, it can be held alongside an HSA without blocking HSA contributions. (Part 6.6)

The standard form a mortgage lender must give you within three business days of receiving your application, showing the rate, payment and closing costs; use it to compare lenders and to check the Closing Disclosure. (Parts 5.3 and 5.5)

The reduction of a 401(k) balance by an unpaid plan loan, typically on leaving a job; it is taxed as a distribution unless the same amount is rolled over by the tax-filing deadline, including extensions. Also called a qualified plan loan offset. (Parts 6.7, 11.2 and 14.4)

A loan’s balance divided by the property’s value; governs PMI cancellation (automatic at a scheduled 78% of original value) and refinancing eligibility. (Part 5.5)

Help with daily activities such as bathing, dressing and eating, at home, in assisted living or in a nursing home; Medicare does not pay for long-term custodial care, and the 2025 national median for a private nursing-home room was $129,575 a year. (Part 10.10)

Coverage that pays a daily or monthly benefit for long-term care after a waiting period. Traditional policies are cheapest bought in your fifties but premiums on existing policies can rise; hybrid policies attach a care rider to life insurance or an annuity; the alternative is self-insuring from savings or home equity. (Part 10.10)

A long-term care insurance policy sold under a state Partnership program; if Medicaid is later needed, assets equal to what the policy paid out are disregarded in the eligibility test. (Part 10.10)

Income replacement (typically 50%–70% of salary) for extended illness or injury after an elimination period, costing roughly 1%–3% of income annually; benefits are tax-free only if you paid the premiums with after-tax dollars. (Part 8.4)

The chance of living longer than a plan assumes: for a 65-year-old couple, the chance that at least one reaches 90 is about 51% (SSA period life table). (Part 10.7)