Tax Forms and Retirement Plans

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1099-DIV

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A tax form that reports dividends or distributions you've earned on stocks or mutual funds.

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1099-B

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A tax form that reports your gains and losses from selling stocks or other investments in your brokerage account.

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401(k) plan

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A defined contribution plan where an employer takes money directly from an employee's salary and places it into a tax-deferred retirement account. The employee doesn't pay taxes on this money until withdrawal. There are limits and penalties for early withdrawals. Employers often match a percentage of employee contributions.

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529 plan

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A U.S. state-sponsored, tax-advantaged way to invest assets toward education costs. Withdrawals can be used for qualified educational expenses at eligible institutions or for K-12 tuition expenses.

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After-tax (dollars/contributions)

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Money that has already been taxed.

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Alternative Minimum Tax

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The AMT applies to U.S. taxpayers with certain types of income that receive favorable tax treatment. It sets a limit on the amount these benefits can reduce total tax.

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Annual contribution limits

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IRS rules that determine how much you can contribute to retirement accounts for the year.

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Annualized return

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A measure of how much value an investment has gained or lost on average each year, taking compound growth into account. Also called annual return.

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Asset allocation

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An investment strategy involving balancing asset classes in your portfolio based on goals, risk tolerance, and other factors. Also referred to as an asset mix.

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Asset class

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One of the three major types of investments: stocks, bonds, and cash equivalents.