Reference

The physician finance glossary.

23 terms, defined the way a colleague who figured it out would define them. These are the same definitions that appear as tap-to-define cards throughout the curriculum — one source, kept current together.

Verified against IRS annual limits, studentaid.gov, the curriculum fact-check ledger · rule year 2026 · reviewed September 2026 · every source is linked in “Sources” below.

1099 income

Contractor pay with no taxes withheld — you owe them yourself.

Income reported on a 1099 (moonlighting, locums, side work) comes with no withholding, so you owe income and self-employment tax directly, usually via quarterly estimated payments. It also opens up a solo 401(k) for extra tax-advantaged space.

See also: moonlighting · tax-advantaged space

401(k)

The workplace retirement account of most private practices and for-profit employers.

A pre-tax (or Roth) employer plan with a $24,500 employee deferral limit in 2026, shared with any 403(b) you also have. Rolling a pre-tax IRA into a 401(k) is the standard fix for the pro-rata rule before a backdoor Roth.

See also: 403(b) · pro-rata rule · employer match

403(b)

The nonprofit-hospital version of a 401(k).

A pre-tax (or Roth) workplace retirement account for employees of nonprofits and public hospitals. You can defer up to $24,500 in 2026 (a limit shared with a 401(k), separate from a 457(b)), often with an employer match on top. Filling it is usually the first tax-advantaged move after capturing the match.

See also: 401(k) · employer match · tax-advantaged space

457(b)

A second deferral bucket at many hospitals — its limit is separate from your 403(b).

A deferred-compensation plan offered by governmental and many nonprofit hospitals. Its $24,500 elective deferral limit in 2026 is separate from the 401(k)/403(b) limit, so an academic physician can defer to both. Governmental 457(b)s can be rolled to an IRA at separation; non-governmental ones cannot, remain the employer’s asset until paid, and usually force a short payout schedule — read the plan document before you fund one.

See also: 403(b) · tax-advantaged space

backdoor Roth

A legal two-step to fund a Roth IRA when you earn too much to do it directly.

You contribute after-tax money to a traditional IRA (no income limit on the contribution), then convert it to a Roth (no income limit on conversions). The end state is identical to a direct Roth contribution — tax-free growth, tax-free in retirement. Congress explicitly blessed it in the 2017 tax law.

See also: pro-rata rule · Roth IRA · MAGI · Form 8606

Direct Loan

The only federal loan type that qualifies for PSLF.

Federal Direct Loans are eligible for PSLF; older FFEL or Perkins loans are not until you consolidate them into a Direct Consolidation Loan. Confirm every loan is a Direct Loan at studentaid.gov before you count on forgiveness.

See also: PSLF · IDR

effective tax rate

What you actually pay on average — below your top bracket whenever your income spans more than one.

Your total tax divided by your total income. Because brackets are marginal, it sits below the top bracket you reach whenever your income spans more than one bracket — which is every physician’s case. Confusing the two is why people overestimate what a raise or a Roth conversion "costs."

See also: marginal tax bracket

employer match

The employer contribution that follows yours — an immediate return once it vests.

The amount your employer adds to your retirement account when you contribute, on the formula in your plan (commonly 25–100% of what you put in, up to a cap). Once vested it is the highest immediate return most physicians will see; unvested match is forfeited if you leave before the vesting date, and employers can suspend matching. For most physicians, funding at least up to the match comes before other investing — the exceptions are high-rate consumer debt and a planned departure before vesting.

See also: 403(b) · 401(k)

Form 8606

The IRS form that keeps your backdoor Roth tax-free.

Files your non-deductible (after-tax) IRA contribution so the conversion is not taxed twice. Skip it and you can end up paying tax on money you already paid tax on. File one for every year you do the backdoor.

See also: backdoor Roth · traditional IRA

HSA

The one account that is deductible going in, tax-free growing, and tax-free coming out for medical costs.

A Health Savings Account (available with a high-deductible health plan) is deductible going in, grows tax-free, and comes out tax-free for qualified medical costs; contributed through payroll it also skips FICA. Non-medical withdrawals before 65 are taxed with a 20% penalty. Invest it instead of spending it and it becomes a second retirement account — the 2026 limits are $4,400 individual / $8,750 family.

See also: tax-advantaged space

IDR

Income-driven repayment — the plans most physicians use to make PSLF payments count.

Federal repayment plans that set your monthly payment from your income: IBR uses discretionary income, and the Repayment Assistance Plan (RAP) uses a share of adjusted gross income. The 10-year Standard plan also qualifies for PSLF but pays the loan off before forgiveness can matter; Extended and Graduated plans, and months in forbearance or deferment, do not count. You recertify income annually.

See also: PSLF · Direct Loan

MAGI

Modified adjusted gross income — the number that decides what you qualify for.

A tweaked version of your adjusted gross income used for phase-outs. For a direct Roth IRA in 2026 it phases out at $153,000–$168,000 (single) and $242,000–$252,000 (married filing jointly). Most attendings clear both ceilings, which is why the backdoor Roth exists.

See also: Roth IRA · backdoor Roth

marginal tax bracket

The rate on your NEXT dollar — not your whole income.

Only the income inside each bracket is taxed at that bracket’s rate, so on income tax alone a raise cannot leave you with less. The cliffs are elsewhere: an income-driven loan payment recalculated on the new income, the Roth IRA phase-out, Medicare IRMAA surcharges, and premium credits can each cost more than the raise at specific margins. Your marginal rate is what matters for pre-tax vs. Roth decisions; your effective rate is what you actually pay on average.

See also: effective tax rate

moonlighting

Extra clinical work — usually paid as a 1099 contractor.

Shifts you pick up outside your main job, often paid without tax withholding as 1099 income. The pay looks great until a surprise tax bill; set aside for taxes and consider a solo 401(k) on the income.

See also: 1099 income

net worth

Everything you own minus everything you owe — the number that shows whether the plan is working.

Assets (retirement, brokerage, cash, home) minus liabilities (student loans, mortgage, car). It is normal to be deeply negative in your thirties as an attending; not knowing the number — and not watching it move — is the real problem.

See also: tax-advantaged space

own-occupation disability insurance

The disability definition a physician’s own policy should carry.

A true own-occupation policy pays if you cannot perform the duties of YOUR medical specialty, even if you could work in another job; weaker versions ("not otherwise engaged", transitional) narrow that. A cheaper "any-occupation" policy can deny a surgeon who can still answer phones. Employer group coverage is usually any-occupation and is a supplement, not a substitute. Your ability to practice is your largest asset — insure it on the definition that protects it.

pro-rata rule

The one trap that makes a backdoor Roth expensive.

When you convert, the IRS treats every dollar across ALL your traditional, SEP, and SIMPLE IRAs as one pool and taxes the conversion proportionally to your pre-tax balance. A $50,000 rollover IRA can make most of a $7,500 conversion taxable. The fix: roll pre-tax IRA money into an employer 401(k) first, then convert cleanly.

See also: backdoor Roth · traditional IRA · Form 8606

PSLF

Public Service Loan Forgiveness — 120 qualifying payments, then the remaining balance is forgiven, federally tax-free.

Forgives your remaining federal Direct Loans after 120 qualifying monthly payments made while employed full-time (30+ hours a week) by a government employer or a 501(c)(3) nonprofit. Forgiveness is not taxed federally; a few states treat it differently. For physicians it can be worth six figures, and most people who lose it lose it on a technicality: the wrong loan type, a plan that does not qualify, an employer that does not, or months in forbearance.

See also: IDR · Direct Loan

Roth IRA

After-tax retirement account: no deduction now, tax-free forever after.

You contribute money you have already paid tax on ($7,500 in 2026), and it grows and comes out completely tax-free in retirement. There is no required minimum distribution and no tax on withdrawals — the most valuable account type for a high earner who expects to stay in high brackets.

See also: traditional IRA · backdoor Roth · MAGI

tail coverage

The malpractice policy that covers claims filed after you leave a claims-made policy.

Most employed physicians carry claims-made malpractice insurance, which covers a claim only while the policy is in force. When you leave, claims for care you already delivered can still arrive; tail coverage (an extended reporting endorsement) covers them. Who pays for it — you or the employer — and at what price is a contract term, and it can run to a year or more of premium.

See also: wRVU

tax-advantaged space

The annual buckets that shelter money from tax — and expire every year.

The combined room across your 401(k)/403(b), 457(b), HSA, backdoor Roth, and similar accounts. Unused workplace-plan space does not roll over (IRA and HSA contributions run until the tax-filing deadline, and a 457(b) has a limited catch-up). It is the most consistently missed money in physician finance because no one outside your own payroll is tracking the limits for you.

See also: 403(b) · HSA · backdoor Roth

traditional IRA

Pre-tax (or non-deductible) IRA — the on-ramp for a backdoor Roth.

An individual retirement account funded with pre-tax or non-deductible dollars. High earners rarely get the deduction, so its main use is as the first step of a backdoor Roth. Any pre-tax balance you keep here triggers the pro-rata rule on conversions.

See also: Roth IRA · backdoor Roth · pro-rata rule

wRVU

Work relative value unit — the currency of physician productivity pay.

A measure of the work you personally do, independent of what the practice bills or collects. Productivity contracts pay you a dollar conversion factor per wRVU, usually above a production threshold. Those two numbers — the rate and the threshold — are what decide your income, and both are in your contract.