Glossary

A focused glossary of the terms you will actually encounter in Roth IRA rules, each with a short primary-source-backed definition and a pointer to the pillar article that covers the concept in depth. Forty terms, updated annually.

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A

AGI

Adjusted Gross Income. Line 11 on Form 1040. Gross income less above-the-line deductions (e.g., HSA contribution, deductible traditional IRA, student-loan interest). The starting point for MAGI, which governs Roth IRA eligibility.

See also: MAGI Estimator

B

Basis

Non-deductible (after-tax) contributions to a traditional IRA. Tracked on Form 8606. Basis in a traditional IRA is what makes a conversion non-taxable to the extent of the basis ratio. For Roth IRAs, all regular contributions are “basis” in the ordering-rules sense — they can be withdrawn tax- and penalty-free at any age.

See also: Backdoor Roth · Pro-Rata Rule

Backdoor Roth IRA

A strategy for contributing to a Roth when MAGI is above the direct-contribution phase-out. Taxpayer makes a non-deductible contribution to a traditional IRA, then converts it to a Roth IRA. The pro-rata rule under IRC §408(d)(2) governs the taxable portion of the conversion.

See also: Backdoor Roth pillar · Calculator

C

Catch-up contribution

Additional contribution allowed starting at age 50. $1,100 for IRAs in 2026 (up from the long-standing $1,000 — first inflation adjustment under SECURE 2.0 §108, per IRS Notice 2025-67). SECURE 2.0 §109 adds a higher “super catch-up” for ages 60–63 in qualified plans. SECURE 2.0 §603 requires catch-ups to be Roth-only for high earners (>$145K prior-year wages, indexed) starting 2026.

See also: Contribution Limits

Compensation (earned income)

Wages, salary, self-employment net earnings, and similar active-income amounts. Roth IRA contributions cannot exceed a taxpayer's compensation for the year under IRC §219(b). Passive income (interest, dividends, rental) does not count.

See also: Eligibility

Conversion

A transfer from a traditional IRA, 401(k), 403(b), or similar pre-tax account into a Roth IRA. The pre-tax portion is includable in gross income in the year of conversion. A distinct 5-year clock attaches to each conversion for penalty purposes (IRC §408A(d)(3)(F)).

See also: Conversion Rules · True Cost Calculator

CPA

Certified Public Accountant. State-licensed accountant qualified to sign tax returns, represent clients before the IRS, and render attest-level assurance. Often relied on for Roth conversion planning alongside a CFP.

CFP

Certified Financial Planner. Credential issued by the CFP Board. Fiduciary-standard financial planning professional. Many Roth strategy articles reference CFP practice standards.

D

DAF

Donor-advised fund. A charitable vehicle. Not directly a Roth concept, but sometimes used to offset a Roth conversion’s income inclusion via a same-year deductible charitable contribution.

E

EDB

Eligible Designated Beneficiary. Under SECURE Act / IRC §401(a)(9)(H), a beneficiary who is exempt from the 10-year rule and may use life-expectancy stretch: surviving spouse, minor child of the account owner (until majority), disabled or chronically-ill person, or a beneficiary not more than 10 years younger than the decedent.

See also: Inherited Roth IRA · Type Classifier

Excess contribution

An IRA contribution above the annual limit or above compensation, or by an ineligible taxpayer. Subject to a 6% excise tax under IRC §4973 for each year the excess remains in the account. Cured by timely corrective withdrawal of the excess plus its Net Income Attributable (NIA).

See also: Excess Contribution pillar

F

FTC

Foreign Tax Credit. IRC §901 credit for income tax paid to a foreign country. Relevant to expat Roth holders weighing foreign-earned-income exclusion versus FTC as the exclusion path to Roth eligibility.

See also: Roth IRA for Expats

FEIE

Foreign Earned Income Exclusion. IRC §911 exclusion for wages earned abroad. Excluded compensation does not count as IRA-eligible compensation under §219(f)(1) (which excludes §911-excluded amounts from the compensation definition), which is the core expat trap.

See also: Roth IRA for Expats

Five-year rule

Two distinct 5-year clocks apply to Roth IRAs. (1) The account 5-year rule: earnings are tax-free only after the first Roth IRA has been open for five tax years. (2) The conversion 5-year rule: each conversion has its own 5-year clock for the 10% penalty. Both governed by IRC §408A(d)(2) and (d)(3)(F).

See also: 5-Year Rule · Conversion 5-Year

Form 5329

Additional Taxes on Qualified Plans. Attached to Form 1040. Part III reports excess IRA contributions (6% excise), Part IX reports missed RMDs (25%/10% excise under SECURE 2.0 §302), Part I reports the 10% early-distribution penalty and its exceptions.

See also: Excess · Missed RMD

Form 8606

Nondeductible IRAs. Tracks basis in traditional IRAs, reports conversions, and reports non-qualified Roth distributions. Backdoor Roth requires Form 8606 every year a non-deductible contribution is made.

See also: Backdoor Roth

G

GPC

Global Privacy Control. A browser signal recognized by California’s CPRA regulations as an opt-out of sale/sharing of personal information. RothIRAHub’s consent banner pre-declines analytics when GPC is detected unless the user overrides.

See also: Cookie Notice

I

IRC

Internal Revenue Code. Title 26 of the U.S. Code. The statutory source for Roth rules. §408A is the Roth IRA section; §219 governs contribution limits; §72(t) governs the early-distribution penalty; §401(a)(9) governs RMDs.

IRMAA

Income-Related Monthly Adjustment Amount. The Medicare Part B and Part D surcharge triggered when MAGI crosses specified thresholds. Roth conversions can spike MAGI and cause a two-year-delayed IRMAA bump. Conversion-planning tools on this site are IRMAA-aware.

See also: True Cost Calculator

M

MAGI

Modified Adjusted Gross Income. AGI plus certain add-backs (foreign-earned-income exclusion, student-loan-interest deduction, etc.). Governs Roth IRA contribution eligibility under §408A(c)(3). The exact modification list differs by context — Roth IRA MAGI is not the same as ACA MAGI or IRMAA MAGI.

See also: MAGI Estimator

Mega backdoor Roth

A 401(k) strategy using after-tax contributions followed by in-plan Roth conversion or in-service rollover to a Roth IRA. Distinct from the backdoor Roth (which uses an IRA). Requires plan features that most 401(k)s do not offer.

See also: Mega Backdoor pillar

N

NIA

Net Income Attributable. The earnings allocable to an excess contribution, computed under Treas. Reg. §1.408-11. Required to accompany a corrective withdrawal. The formula accounts for negative earnings.

See also: Excess Contribution

NIIT

Net Investment Income Tax. IRC §1411 3.8% surtax on investment income for MAGI above $200K single / $250K MFJ. A Roth conversion is not itself investment income but can push other income over the NIIT threshold.

See also: Conversion Tax Implications

Non-spouse beneficiary

An inherited-IRA beneficiary who is not the decedent’s surviving spouse. Post-SECURE, most non-spouse beneficiaries are non-EDBs subject to the 10-year rule. Under TD 10001 (July 2024), continuous annual RMDs apply during the 10-year window if the decedent was past RMD-age.

See also: Non-Spouse Rules

P

Pro-rata rule

Under IRC §408(d)(2), distributions and conversions from a taxpayer’s traditional/SEP/SIMPLE IRAs are allocated between pre-tax and after-tax amounts in proportion to the total pre-tax balance. The rule aggregates across all such IRAs owned by the taxpayer, which is the central trap in the backdoor Roth.

See also: Pro-Rata Rule pillar

Q

Qualified distribution

A Roth distribution that is both (a) after the 5-year account clock and (b) made for a qualifying reason (age 59½, death, disability, first-home purchase up to $10K). Qualified distributions are entirely tax- and penalty-free. Governed by IRC §408A(d)(2).

See also: Withdrawal Rules

R

Recharacterization

The pre-TCJA option to undo a Roth conversion. Eliminated for Roth conversions by the Tax Cuts and Jobs Act of 2017 effective for tax years after 2017. Recharacterization of contributions (between Roth and traditional) remains permitted.

See also: Conversion Rules

Revenue Procedure

An IRS pronouncement setting out procedures taxpayers must follow. Rev. Proc. 2023-34 and subsequent annual procedures publish the inflation-adjusted IRA dollar figures for each year.

See also: IRS Notice & Ruling Tracker

RMD

Required Minimum Distribution. Mandated annual withdrawal starting at age 73 for individuals born 1951–1959; age 75 for those born 1960 or later (SECURE 2.0 §107, as finalized in TD 10001). Roth IRAs have no RMDs during the owner’s lifetime under IRC §408A(c)(5); inherited Roth IRAs do have RMDs (but only the year-10 depletion deadline, not years 1–9, when the Roth owner had no RBD).

See also: Roth IRA RMDs

Roth IRA

Individual Retirement Account under IRC §408A. Contributions are after-tax; qualified distributions of earnings are tax-free. Distinguished from traditional IRA (pre-tax contributions, taxable distributions) by the timing of tax.

See also: Roth IRA Rules

S

Saver’s Credit

The IRC §25B nonrefundable credit for retirement savings by low- and moderate-income taxpayers. Replaced starting in 2027 by the SECURE 2.0 §103 Saver’s Match, a federal matching contribution deposited into the taxpayer’s applicable retirement savings vehicle (e.g., IRA or employer-plan account).

See also: Saver’s Match

SECURE Act

Setting Every Community Up for Retirement Enhancement Act of 2019. Replaced the stretch IRA with the 10-year rule for most non-spouse beneficiaries. SECURE Act 2.0 (2022) added dozens of further changes to retirement-account rules, including Saver’s Match, Roth-only catch-ups for high earners, and reduced excise tax for missed RMDs.

See also: Congress Tracker

SEP IRA

Simplified Employee Pension. Employer-funded retirement account used mainly by self-employed taxpayers. Contributions are pre-tax (traditional) or, after SECURE 2.0 §601, optionally Roth.

See also: Roth IRA Rules

SIMPLE IRA

Savings Incentive Match Plan for Employees. Small-employer retirement account. A two-year rule applies: withdrawals or conversions within the first two years of the account are subject to a 25% (rather than 10%) penalty under IRC §72(t)(6). SECURE 2.0 §601 added Roth SIMPLE option.

See also: SIMPLE IRA Rules

Spousal IRA

A contribution to the IRA of a non-working spouse using the working spouse’s compensation. Allowed under IRC §219(c) for married filing jointly taxpayers. Each spouse’s contribution is subject to the normal limit; the aggregate cannot exceed the working spouse’s compensation.

See also: Spousal IRA

Stretch IRA

The pre-SECURE practice of a non-spouse beneficiary taking inherited-IRA distributions over their own life expectancy. Largely eliminated by the SECURE Act for deaths after 2019; now only available to EDBs.

See also: Inherited Roth IRA

T

TCJA

Tax Cuts and Jobs Act of 2017. Among other things, eliminated Roth conversion recharacterization and adjusted individual tax brackets. Many TCJA provisions expire after 2025 absent further legislation.

See also: Congress Tracker

TD

Treasury Decision. A regulation issued by the Treasury Department interpreting the Internal Revenue Code. TD 10001 (July 2024) contains the final regulations on inherited-IRA distributions under SECURE and SECURE 2.0.

See also: IRS Tracker

Treas. Reg.

Treasury Regulation. The codified form of regulations issued via Treasury Decisions. §1.408A-6 covers Roth IRA distributions; §1.408-11 governs NIA on corrective withdrawals.

U

UBTI

Unrelated Business Taxable Income. IRC §512 income of an otherwise tax-exempt vehicle (such as an IRA) from operating a trade or business. Can arise in a Roth IRA holding MLPs or leveraged real estate. Triggers Form 990-T filing by the IRA custodian.

See also: Roth IRA Rules

5

59½

The age threshold in IRC §72(t) above which the 10% early-distribution penalty no longer applies to IRA withdrawals. Passing 59½ does not alone make Roth earnings tax-free — the account 5-year clock must also have run.

See also: Withdrawal Age

A note on authority

Definitions here are oriented toward Roth IRA practice. Where a term has a broader meaning in tax law generally, we give the Roth-relevant meaning and point to the controlling statute or regulation. The baseline of correctness is the Internal Revenue Code, Treasury Regulations, and currently-effective IRS guidance. If a term’s definition below ever conflicts with a change in primary sources, the primary source controls and we’ll update here.