Reference

The physician finance glossary.

22 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 August 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 private-practice workplace retirement account.

A pre-tax (or Roth) employer plan with a $24,500 employee deferral limit in 2026. 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 hospitals. You can defer up to $24,500 in 2026, 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

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 — lower than your top bracket.

Your total tax divided by your total income. Because brackets are marginal, it is always lower than the top bracket you reach. Confusing the two is why people overestimate what a raise or a Roth conversion "costs."

See also: marginal tax bracket

employer match

Free money — the highest guaranteed return you will ever get.

The amount your employer adds to your retirement account when you contribute. Not capturing the full match is leaving a 50–100% instant return on the table. Always fund at least up to the match before anything else.

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 only triple-tax-advantaged account there is.

A Health Savings Account (available with a high-deductible health plan) is deductible going in, grows tax-free, and comes out tax-free for medical costs. Invest it instead of spending it and it becomes a stealth retirement account — the 2026 limits are $4,400 individual / $8,750 family.

See also: tax-advantaged space

IDR

Income-driven repayment — the plans that make PSLF payments count.

Federal repayment plans that set your monthly payment as a share of discretionary income. Enrolling in a qualifying IDR plan is a requirement for PSLF; the wrong plan (Extended, Graduated) or forbearance means the months 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 a raise never costs you money overall. Your marginal rate is what matters for decisions like pre-tax vs. Roth contributions; your effective rate is what you actually pay on average.

See also: effective tax rate

MGMA

The compensation survey your employer already uses to set your pay.

The Medical Group Management Association publishes specialty benchmarks for wRVU production, conversion factors, and total compensation by percentile. Your employer runs these numbers before your offer — reading them yourself is how you negotiate from the same data.

See also: wRVU

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 one number that matters.

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 only disability policy a physician should own.

Pays out if you cannot perform the duties of YOUR medical specialty, even if you could work in another job. A cheaper "any-occupation" policy can deny a surgeon who can still answer phones. Your ability to practice is your largest asset — insure it correctly.

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 balance is wiped, tax-free.

Forgives your remaining federal student loans after 120 qualifying monthly payments while working full-time for a nonprofit or government employer. For physicians it can be worth six figures — but only if every box (Direct Loans, a qualifying IDR plan, a qualifying employer, certified payments) is checked. Most people who lose it lose it on a technicality.

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

tax-advantaged space

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

The combined room across your 401(k)/403(b), HSA, backdoor Roth, and similar accounts. Unused space does not roll over — it is the most consistently missed money in physician finance because nobody 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. Comparing your rate and volume to MGMA benchmarks is how you find out if you are underpaid.

See also: MGMA