Plain-English retirement terms
Every term we use across Pebyl Financial — annuity contract language, IRA rules, and the IRS jargon you'll see in product disclosures.
Annuity
An insurance contract issued by a life insurance carrier that, in exchange for one or more premium payments, credits interest and/or pays income according to the contract's terms. Annuities are not bank deposits and are not FDIC insured.
MYGA (Multi-Year Guaranteed Annuity)
A fixed annuity that credits a single contractual interest rate for a stated term (commonly 2–10 years). The rate is set at issue by the carrier and locked for the term.
Fixed Indexed Annuity (FIA)
An annuity whose credited interest is tied to the performance of an external index, subject to caps, participation rates, or spreads. The contract is not invested in the index; a 0% floor typically protects against negative index periods.
Surrender Charge
A carrier-disclosed charge applied to withdrawals above the contract's free-withdrawal amount during the surrender period. The schedule typically declines each year.
Market Value Adjustment (MVA)
An interest-rate-based adjustment some annuity contracts apply on early surrender. If rates have risen since issue, the MVA generally reduces the surrender amount; if rates have fallen, it can increase it.
1035 Exchange
A tax-free exchange under IRC §1035 between non-qualified annuity (or life) contracts. Funds must move directly from carrier to carrier; the gain transfers in the new contract's basis.
Required Minimum Distribution (RMD)
The minimum amount the IRS requires you to withdraw each year from most tax-deferred retirement accounts beginning at the applicable age (currently 73). Calculated using the IRS Uniform Lifetime Table.
Roth Conversion
Moving Traditional IRA dollars into a Roth IRA in a given tax year. The converted amount is added to ordinary income for that year; future qualified Roth withdrawals are tax-free.
Traditional IRA
An individual retirement account funded with potentially tax-deductible contributions. Earnings grow tax-deferred; distributions are taxed as ordinary income and subject to RMDs at the applicable age.
Roth IRA
An individual retirement account funded with after-tax contributions. Earnings grow tax-free; qualified distributions are tax-free; original owner has no lifetime RMDs.
401(k) Rollover
Moving funds from an employer-sponsored 401(k) (or 403(b), 457, TSP) into an IRA, typically via a trustee-to-trustee transfer to avoid mandatory tax withholding.
Cap Rate
The maximum interest rate an FIA crediting strategy can credit for a given index period, regardless of how high the index moves.
Participation Rate
The percentage of the index movement an FIA strategy credits. A 70% participation rate on a 10% index move credits 7%.
Spread
An amount the carrier subtracts from the index movement before crediting in an FIA strategy. A 2% spread on a 10% index move credits 8%.
Free-Withdrawal Provision
The amount a contract owner can withdraw each year without surrender charges during the surrender period. Commonly 5–10% of account value, sometimes interest-only in year one.
Claims-Paying Ability
The financial strength of the issuing insurance carrier, which backs all guarantees in an insurance contract. Rated by AM Best, S&P, Moody's, and Fitch.
State Guaranty Association
A statutory backstop that provides limited coverage for in-state policyholders if a carrier becomes insolvent. Coverage limits vary by state and are not a marketing feature carriers may advertise.
Fixed-Only Practice
An insurance practice that offers only fixed insurance and annuity products — no variable annuities, mutual funds, or securities. Pebyl Financial is fixed-only.