annuity

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Annuity

A regular periodic payment made by an insurance company to a policyholder for a specified period of time.

Annuity

A product offered by an insurance company or an employer to which one makes contribution(s) and immediately or later begins receiving payments, which usually last the remainder of the annuitant's life. An annuity usually refers to a retirement account into which the annuitant makes payments over his/her working life. The payments are then invested and the annuitant begins to receive the principal plus earnings after retirement. A qualifying retirement account is an annuity that allows for either contributions or withdrawals to be tax-exempt up to a certain amount. However, a wide variety of annuities exist. An annuitant may make a one-time contribution or monthly contributions over a period of time. Likewise, one may begin to receive payments immediately or defer them to a later date such as retirement. One may elect to make fixed or variable contributions as well as to receive fixed or variable payments. See also: 401(k), IRA.

annuity

A stream of equal payments to an individual, such as to a retiree, that occur at predetermined intervals (that is, monthly or annually). The payments may continue for a fixed period or for a contingent period, such as for the recipient's lifetime. Although annuities are most often associated with insurance companies and retirement programs, the payment of interest to a bondholder is also an example of an annuity. See also annuity certain, contingent annuity, deferred annuity, fixed annuity, joint and survivor annuity, refund annuity, straight life annuity, tax-sheltered annuity, variable annuity.

Annuity.

Originally, an annuity simply meant an annual payment. That's why the retirement income you receive from a defined benefit plan each year, usually in monthly installments, is called a pension annuity.

But an annuity is also an insurance company product that's designed to allow you to accumulate tax-deferred assets that can be converted to a source of lifetime annual income.

When a deferred annuity is offered as part of a qualified plan, such as a traditional 401(k), 403(b), or tax-deferred annuity (TDA), you can contribute up to the annual limit and typically begin to take income from the annuity when you retire.

You can also buy a nonqualified deferred annuity contract on your own. With nonqualified annuities, there are no federal limits on annual contributions and no required withdrawals, though you may begin receiving income without penalty when you turn 59 1/2.

An immediate annuity, in contrast, is one you purchase with a lump sum when you are ready to begin receiving income, usually when you retire. The payouts begin right away and the annuity company promises the income will last your lifetime.

With all types of annuities, the guarantee of lifetime annuity income depends on the claims-paying ability of the company that sells the annuity contract.

annuity

a series of equal payments at fixed intervals deriving from an original lumpsum INVESTMENT.

annuity

a series of equal payments at fixed intervals from an original lump sum INVESTMENT. Where an annuity has a fixed time span, it is termed an annuity certain, and the periodic receipts comprise both a phased repayment of principal (the original lump sum payment) and interest, such that at the end of the fixed term there is a zero balance on the account. An annuity in perpetuity does not have a fixed time span but continues indefinitely and receipts can therefore come only from interest earned. Annuities can be obtained from pension funds or life insurance schemes.

annuity

A sum of money received on a regular basis as one of a series of fixed payments. Real property is sometimes sold in exchange for a private annuity.The buyer guarantees a fixed monthly income to the seller for the seller's lifetime.The seller, of course, is gambling he or she will live much longer than anyone could expect,and thus ultimately receive far more than the property was worth. The buyer is gambling that the seller will die sooner as opposed to later, and the buyer will have a windfall.Wise sellers will include a clause guaranteeing a minimum term for payments,even if they must be made to their estate or heirs.See advance payment annuity and ordinary annuity.

Annuity

An amount payable to a person at specified intervals for a specific period of time or for life. The amouont may be fixed or variable. Payments represent a partial return of capital and a return on the capital investment.
References in periodicals archive ?
Because the computed inclusion amount is, effectively, the amount necessary to fund the annuity balances in perpetuity, the computed inclusion amount will exceed the fair market value of the trust for a short-term trust when more than a relatively modest percentage of the trust is annuitized.
When a variable annuity is annuitized, the contract's accumulation units are exchanged for annuity units.
Assume that Ron would have a total RMD of around $8,000 for his IRAs this year, if he hadn't annuitized any part of his $190,000 IRA.
To calculate the tax due on the annuity's income stream, we must determine the annuity exclusion percentage which is established when the contract is annuitized.
Also, the monthly income from the DIA could work out to be higher than that of the income from the annuitized SPIA, one example showed.
The IRS maintained that the private annuity transaction was therefore not for adequate and full consideration, and was in substance a part-gift, part-sale of the annuitized property.
Veridium intends to provide targeted clients with turn-key processing systems based on Veridium's technologies for no up-front cost in return for fixed annuitized charges based on a percentage of the client's ongoing savings.
Moreover, the stipulation that the investor will cash out both alternatives in a lump sum obviates the advantages of the taxation of annuitized proceeds and assumes that the annuity payout factors guaranteed in the annuity can never be of any value.
The basic idea is either: 1) to enhance the amounts being annuitized in case of earlier onset of chronic illness or 2) to increase the actual payments at time of chronic illness onset, should that occur after payments have begun.
Pinkans said that since less than 10% of equity index annuities are annuitized, the industry ought to consider that some of those annuity sales really should be index life.
On the annuities front, Veridium intends to provide targeted clients with turn-key processing systems based on Veridium's technologies for no up-front cost in return for fixed annuitized charges based on a percentage of the client's ongoing savings.
Owners seem to worry that the lack of liquidity inherent in annuitized contracts does not provide enough flexibility to cover unforeseen emergencies or other contingencies that may occur in the future.