Income annuity

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Income Annuity

A fixed or variable annuity that pays a certain monthly or (rarely) annual sum for the term of the annuity. The payments begin as soon as the annuitant buys the annuity. Usually, the annuity's term is the remainder of the annuitant's life, and sometimes the life of his/her surviving spouse, depending on the nature of the particular contract. An income annuity is usually purchased for a lump sum, and is designed to provide a stable income for the annuitant, generally in retirement. See also: Lifetime annuity, Pension.

Income annuity.

An income annuity, sometimes called an immediate annuity, pays an annual income, usually in monthly installments.

Your income is based on the annuity's price, your age (and your joint annuitant's age if you name one), the term length, and the specific details of the contract. It's also dependent on the annuity provider's ability to meet its obligations.

You might buy an income annuity with assets from your 401(k) plan, or your plan may buy an income annuity on your behalf. In that case, the annuity provider guarantees an income that will satisfy your minimum required distribution.

References in periodicals archive ?
The Treasury Department just changed the tax rules so people can now invest IRA money in deferred income annuities without worrying about required minimum distributions.
ERISA plans can't discriminate on sex; income annuities use gender-specific mortality tables.
American General Life is shining its spotlight on income annuities as part of a back-to-basics strategy, said John Rafferty, vice president of annuity marketing.
BOSTON -- Fidelity Investments([R]) today announced it is expanding its retirement income product offering to include deferred income annuities, which enable pre-retirees to turn a portion of their savings into a guaranteed, pension-like stream of lifetime income in the future.
In an effort to show how annuities can help to manage longevity risk in retirement, Northwestern Mutual recently partnered with academics Michael Finke, Professor and Director of Retirement Planning and Living, Texas Tech University and Wade Pfau, Professor of Retirement Income, American College to demonstrate the role of deferred income annuities (DIA) in retirement portfolios.
When payout rates for income annuities are released with the new mortality tables, you will see the payout rates drop because of an adjustment in longevity credits.
New York Life leads the $10 billion income annuity market with 33 percent market share for immediate income annuities and 40 percent market share for deferred income annuities, according to an industry source.
Indexed and income annuities were down 15 percent and 7 percent, respectively.
If your clients, or even you, are focused on other types of retirement savings vehicles, they could be missing out on the benefits of income annuities.
Assets in these income annuities grow at a fixed rate for a period of time, after which the contract-holder can begin taking payments or opt to postpone them further.
Academics, policymakers and AARP have all cited the need among boomer retirees for income annuities.