Wraparound annuity

An investment that allows the annuitant the choice of underlying investments tax-deferred.

Wraparound Annuity

An annuity contract allowing an investor some control over the underlying securities and assets. The funds in a wraparound annuity are tax-deferred until withdrawal. The IRS does not allow the purchase of a wraparound annuity if it is possible to purchase the same investments without a tax deferral. Therefore, a wraparound annuity is not a permitted tax avoidance vehicle.

wraparound annuity

An annuity contract in which the investor has a measure of control regarding the investments that are in the plan, and in which the income generated by those investments is sheltered from taxation until withdrawal. Tax deferral through a wraparound annuity is no longer permitted by the Internal Revenue Service.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive

(103) Starting in late 1975, a cluster of stories appeared in the financial and popular press dubbing the investment annuity the "wraparound annuity" and describing it as a tax shelter used by wealthier individuals.

The Service responded to the "problems encountered by issuers of wraparound annuities attempting to comply" by affording an additional year's relief for "capital gains dividends and unrealized appreciation." IRS News: Relief Issued for Wraparound Annuity Reporting, 14 TAX NOTES 440, 440 (Feb.

Beating the "wrap": the agency effort to control wraparound insurance tax shelters

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