Individual retirement annuity

Also found in: Acronyms.

Individual Retirement Annuity

A structure similar to an individual retirement account, with the key difference being that the contributions invested are not actively managed. Individual retirement annuities have the same contribution limits and tax advantages as individual retirement accounts. The annuities are purchased from an insurance company and are invested according to some defined scheme.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Individual retirement annuity.

An individual retirement annuity is one type of individual retirement arrangement.

It resembles the better-known individual retirement account in most ways, such as annual contribution limits, catch-up provisions if you're 50 or older, and withdrawal requirements.

In addition, the two share a common acronym -- IRA -- and come in three varieties: traditional nondeductible, traditional deductible, and Roth.

The key difference between the two is that with an individual retirement account you may invest your contributions in any of the alternatives available through your account custodian. With an individual retirement annuity, your money goes into either a fixed or variable annuity offered by the insurance company you have chosen as custodian.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Thus, the nontaxable portion of a distribution (whether from a traditional individual retirement annuity or account) is equal to the following:
Proposed regulations state that in order for a flexible premium annuity to qualify as an individual retirement annuity, the contract must provide that (1) at no time after the initial premium has been paid will a specified renewal premium be required, (2) the contract may be continued as a paid-up annuity under its nonforfeiture provision if premium payments cease altogether; and, (3) if the contract is continued on a paid-up basis, it may be reinstated at any date prior to its maturity date by a payment of premium to the insurer.
A participation certificate in a group annuity contract meeting the above requirements will be considered an individual retirement annuity if there is a separate accounting for the benefit allocable to each participant-owner and the group contract is for the exclusive benefit of the participant-owners and their beneficiaries.
A "wraparound annuity" contract entered into on or before September 25, 1981 as an individual retirement annuity will continue to be treated for tax purposes as an individual retirement annuity provided no contributions are made on behalf of any individual who was not included under the contract on that date.
(2) Furthermore, in the case of contributions to an endowment contract individual retirement annuity issued before November 7, 1978, no deduction is allowed for contributions that are allocable to the purchase of life insurance protection.
When an individual retirement annuity is converted to a Roth IRA, or when an individual retirement account that holds an annuity contract as an asset is converted to a Roth IRA, the amount that is deemed distributed is the fair market value of the annuity contract on the date of the (deemed) distribution.
No early distribution occurs where accumulation units in an individual retirement annuity are surrendered to purchase a disability waiver of premium feature.
7 SEP IRA--An IRA or individual retirement annuity to which the employer contributes but which the employee owns and controls.
408(b)(1) provides that a contract for an individual retirement annuity must not be transferable by the owner.
Situation 2: Husband H established an individual retirement account and an individual retirement annuity (IRAS).
rule applies to each separate individual retirement account, individual retirement annuity, or retirement bond maintained by an individual.

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