Personal Finance Glossary R to S: Plain-English Definitions

The only income-driven plan for borrowers with a federal loan first disbursed on or after July 1, 2026: 1%–10% of total AGI by $10,000 bands, minus $50 a month per dependent, minimum $10 a month; unpaid monthly interest is waived and any balance is forgiven after 360 qualifying payments (30 years). (Part 4.3)

Limits on how far an adjustable rate can move: at the first reset, at each later reset and over the life of the loan. A 5/1/5 structure allows 5, 1 and 5 percentage points. (Part 5.4)

A lender’s commitment to hold an interest rate until a set date, typically 30, 45 or 60 days, provided the application does not change; extending it can cost extra. (Part 5.3)

A nominal return is counted in future dollars; the real return removes inflation: real = (1 + nominal) ÷ (1 + inflation) − 1, so 7% nominal with 3% inflation is 1.07 ÷ 1.03 − 1 = 3.88%. (Parts 2.7 and 7.1)

Periodically buying and selling to restore a portfolio’s target asset allocation. (Part 7.4)

A service through which your bank splits a large deposit into pieces under $250,000 placed at other insured banks, so the whole sum is insured while you keep one relationship and one statement. (Part 2.6)

A tax credit paid to you even if it exceeds the tax you owe. A nonrefundable credit can reduce tax only to zero; a partly refundable one, like the Child Tax Credit, pays out only a capped portion. (Part 9.4)

The SEC standard, in force since June 30, 2020, requiring a broker-dealer to act in a retail customer’s best interest when making a recommendation, through disclosure, care, conflict-of-interest and compliance obligations; unlike fiduciary duty, it imposes no general duty to monitor the account afterward. (Part 7.9)

The federal rule on how fast deposits become spendable: electronic deposits by the next business day; for checks, $275 the next business day and the rest of a local check by the second, with longer holds allowed above $6,725 a day, for new accounts and for repeatedly overdrawn accounts. (Part 2.1)

The Federal Reserve rule that once limited convenient withdrawals from savings to six a month; the Fed deleted the limit on April 24, 2020, though banks may keep one by contract. (Part 2.1)

The federal rule for electronic fund transfers: debit-card loss limited to $50 if reported within two business days, $500 after that, potentially unlimited after 60 days from the statement; banks must investigate within 10 business days or give provisional credit; overdraft fees on ATM and everyday debit need opt-in. (Parts 2.4, 13.3 and 13.4)

The Truth in Lending rule for credit: unauthorized-use liability on a credit card is capped at $50, and a written billing-error dispute within 60 days must be resolved within two billing cycles and no more than 90 days. (Part 13.4)

Insurance settlement that pays to repair or replace damaged property with materials of like kind and quality, with no deduction for depreciation. (Part 8.5)

A person or organization appointed by the Social Security Administration to receive and manage benefits for someone who cannot manage them; a power of attorney does not give this authority. (Part 11.6)

The lessor’s estimate of a car’s worth at lease end, set as a percentage of MSRP; the higher it is, the lower the depreciation part of the payment. (Part 3.9)

A Department of Labor database, created by SECURE 2.0, for finding private-sector employer and union retirement plans from past jobs. (Part 6.7)

The retiree’s mirror of dollar-cost averaging: withdrawing a fixed dollar amount means selling more shares when prices are low, which deepens the damage from early losses. (Part 10.7)

A trust holding assets during life and distributing them at death without probate, provided assets are actually retitled into it. (Part 12.3)

A state law that automatically cancels an ex-spouse’s beneficiary designation at divorce. Where a state has one, it can apply to IRAs and individual policies, but it is preempted for employer plans governed by ERISA. (Part 12.1)

The federal right to cancel a HELOC, home equity loan or new-lender refinance on your principal home until midnight of the third business day after closing; it does not apply to purchase loans. (Part 5.7)

Mandatory annual withdrawals from traditional retirement accounts starting at 73 or 75, depending on birth year. (Part 10.6)

From 2026, a worker whose prior-year FICA wages from the plan sponsor exceeded $150,000 must make 401(k), 403(b) and governmental 457(b) catch-up contributions as Roth; the IRS’s final regulations apply from 2027, with good-faith compliance before then. (Part 6.2)

Retirement accounts funded with after-tax dollars, growing and withdrawing tax-free once qualified; direct Roth IRA contributions phase out at $153,000–$168,000 of MAGI single, $242,000–$252,000 joint (2026). (Part 6.3)

A promise of employer shares that are delivered as they vest; their value on the vesting date is taxed as wages, and unvested units are usually forfeited on leaving. (Part 6.1)

The exception that removes the 10% additional tax on withdrawals from an employer plan for someone who leaves that employer in or after the calendar year they turn 55 (50 for certain public-safety employees); it does not apply to IRAs. (Part 6.7)

Divide 72 by the annual return in percent to estimate the years money takes to double: 72 ÷ 7 = 10.3 years against an exact 10.24; accurate within about 2% between roughly 4% and 12%. (Part 7.1)

A 401(k) design in which the employer matches 100% of the first 3% of pay plus 50% of the next 2%, or contributes 3% of pay for every eligible employee, with those contributions fully vested when made. In exchange, the plan skips the annual ADP and ACP nondiscrimination tests. An automatic-enrollment version (a QACA) instead matches 100% of the first 1% of pay plus 50% of the next 5% and may require two years of service to vest. (Part 6.5)

The limit on deducting state and local taxes for itemizers: $40,400 for 2026 (rising 1% a year through 2029), reduced by 30% of MAGI above $505,000 but never below $10,000, and back to $10,000 from 2030. (Parts 9.2 and 9.6)

A credit of 50%, 20% or 10% of up to $2,000 of retirement contributions for lower-income savers; 2026 AGI limits $40,250 single, $60,375 head of household, $80,500 joint, with a cliff at each limit. (Parts 9.1 and 9.4)

The new IRS schedule for the senior, tips, overtime and car-loan interest deductions created by OBBBA for 2025–2028, claimed whether or not you itemize. (Part 9.2)

A card backed by a cash deposit that usually sets the limit; it reports like any card, and many issuers return the deposit and convert it to an unsecured card after six to twelve months of on-time payments. (Parts 1.7 and 3.7)

The 15.3% combined Social Security/Medicare tax a self-employed person owes on 92.35% of net self-employment profit, with the 12.4% Social Security part applying only up to the $184,500 wage base (2026). (Part 9.3)

Money the seller agrees to put toward the buyer’s closing costs and prepaids; it cannot fund the down payment, and Fannie Mae caps it at 3%, 6% or 9% of price depending on loan-to-value. (Part 5.3)

A 2018 federal law giving trained financial institution staff immunity for good-faith, reasonable-care reports of suspected exploitation of people 65 and older. (Part 13.5)

A Simplified Employee Pension: an employer-only retirement contribution of up to 25% of pay (20% of net profit after half of self-employment tax for a sole proprietor), capped at $72,000 for 2026, which can be opened and funded up to the tax-filing deadline including extensions; employees must get the same percentage. (Part 6.8)

The danger that poor returns arrive early in retirement, while withdrawals are being made; with identical average returns, the 10.7 example’s early-crash retiree held $635,129 less after 15 years. (Part 10.7)

A fall in a home’s value large enough to let a lender freeze or cut a HELOC. What counts varies with the circumstances, but under Regulation Z’s official interpretation a fall is always significant once the original gap between the credit limit and the available equity has shrunk by half. (Part 5.7)

A fraud in which an attacker moves your phone number to a SIM card they control, intercepting text codes and password resets; FCC rules adopted in 2023 will require carriers to offer free number-lock protection, but compliance has been postponed, so ask your carrier to turn it on. (Part 13.4)

An employer retirement plan for businesses with 100 or fewer employees; 2026 deferral limit $17,000 ($18,100 at employers with 25 or fewer employees), with a required employer match or contribution for every eligible employee; balances count in the backdoor-Roth pro-rata rule. (Part 6.8)

Money set aside automatically in small, regular amounts for a cost that is certain but irregular, such as car repairs or an annual insurance premium, so the bill does not fall on the emergency fund. Annual cost ÷ 12 gives the monthly transfer. (Part 1.5)

Coverage by the Securities Investor Protection Corporation that restores missing cash and securities when a member brokerage fails, up to $500,000 per customer including $250,000 of cash; it does not cover market losses. (Part 7.9)

67, for anyone born in 1960 or later — the age at which the full Primary Insurance Amount is payable. (Part 10.3)

The Secured Overnight Financing Rate, published by the New York Fed; its 30-day average is the usual index for variable-rate private student loans. (Part 4.5)

A one-participant 401(k) for a business owner with no employees other than a spouse; the owner contributes as employee (up to $24,500 for 2026) and as employer (20% of net profit after half of self-employment tax), up to $72,000 in total. (Part 6.8)

A window outside open enrollment, opened by events such as losing coverage, marriage or a birth, in which you can join or change a health plan, for example a spouse’s employer plan after losing job-based coverage: generally 30 days for employer plans and 60 days on the Marketplace. (Parts 8.2 and 14.4)

A trust that holds money for a disabled person without counting against SSI and Medicaid resource limits; one funded with the person’s own money must repay Medicaid at death. (Part 12.3)

An annuity bought with one payment that starts income within a year, usually for life — the purest form of longevity insurance. (Part 10.10)

S&P Dow Jones Indices’ report on active-fund performance versus benchmarks; 79% of active U.S. large-cap funds underperformed the S&P 500 in 2025, and 92.6% over the 20 years to June 30, 2026. (Part 7.3)

Auto liability limits written as three numbers, such as 30/60/25: thousands of dollars per injured person, per accident for all injuries, and for property damage. (Part 8.6)

Up to 50% of the worker’s Primary Insurance Amount, paid to a spouse at the spouse’s full retirement age (32.5% if claimed at 62 with an FRA of 67) once the worker has filed; it earns no delayed retirement credits. A divorced spouse may qualify after a marriage of at least 10 years. (Part 10.8)

The part of a spousal benefit actually paid to someone who also has their own benefit: half the worker’s PIA minus the spouse’s own PIA, reduced if it starts before full retirement age. (Part 10.8)

A power of attorney that takes effect only after the signer is shown to be incapacitated, usually by a doctor’s written statement; the proof requirement can delay an agent when help is needed most. (Part 12.2)

A fixed deduction available to filers who don’t itemize; 2026 levels $16,100 single, $32,200 joint and $24,150 head of household, made permanent and indexed by OBBBA. (Part 9.2)

Whether a state adopts federal tax rules. California, for example, does not allow the federal HSA deduction. (Part 9.6)

The state-set window, most often three to six years, in which a creditor can sue over a debt; in many states a partial payment or written acknowledgment can restart it. It is separate from the seven-year credit-report clock. (Part 3.8)

Executor and attorney fees set by statute as a percentage of the gross estate, as in California, where mortgages do not reduce the base. (Part 12.3)

The reset of an inherited investment’s cost basis to its value at the date of death, so gains before death are never taxed to the heir; inherited IRAs and 401(k)s get no step-up. (Part 11.7)

The number the FAFSA produces to measure a family’s financial strength; it can be negative, is not a bill, and is subtracted from cost of attendance to gauge need. (Part 4.6)

Parent net worth above an asset protection allowance is converted at 12% and charged at 22%–47%, so a parent asset raises the SAI by at most 5.64% of its value; student assets are assessed at 20%. (Part 4.6)

Up to $2,500 of student loan interest deductible each year without itemizing; for 2026 it phases out between $85,000 and $100,000 of modified AGI ($175,000–$205,000 joint). (Part 4.6)

A recorded agreement in which an existing lender, typically a HELOC lender, accepts second place behind a new first mortgage so the first mortgage can be refinanced without paying off the line. (Part 5.7)

A federal Direct Loan for undergraduates with financial need on which the government pays the interest during enrollment and the grace period. (Part 4.1)

Social Security’s earnings test for disability: earning more than the monthly SGA amount ($1,690 in 2026, $2,830 if blind) generally means you are not disabled for SSDI purposes. (Part 8.4)

The wash-sale test for a replacement security. Stock of a different company ordinarily isn’t substantially identical; whether two funds tracking the same index are is unsettled. (Part 9.5)

The federal withholding on supplemental wages, meaning pay outside regular wages such as bonuses, commissions and RSU income: a flat 22% in 2026 or the aggregate method, and a mandatory 37% on supplemental pay above $1 million in a year. The flat 22% can fall short of the tax owed in higher brackets. (Parts 1.6 and 6.1)

Social Security paid to a surviving spouse: up to 100% of what the deceased received or was entitled to at the survivor’s full retirement age, reduced from age 60. Because it reflects the deceased’s claiming age, the higher earner’s delay protects the survivor. (Part 10.8)

Fraud using a fabricated identity built from a mix of real and invented personal information, such as a real Social Security number with a made-up name. (Part 13.1)

A discretionary step, requiring sign-off from the Treasury, the Federal Reserve and the FDIC, that let uninsured depositors at Silicon Valley Bank and Signature Bank be repaid in March 2023; it is not deposit insurance and is not promised next time. (Part 2.6)