Exclusion Ratio


DEFINITION of 'Exclusion Ratio'

The portion of the return on investments that is income tax exempt. It represents a payback of initial investments rather than capital gains.

BREAKING DOWN 'Exclusion Ratio'

The exclusion ratio arises mainly through different forms of non-qualified insurance annuities.

  1. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  2. Annuity

    A financial product that pays out a fixed stream of payments ...
  3. Income Tax

    A tax that governments impose on financial income generated by ...
  4. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
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  1. How liquid are variable annuities?

    Variable deferred annuities and variable immediate annuities are not considered liquid. Variable deferred annuities carry ... Read Full Answer >>
  2. Do variable annuities have RMDs?

    Variable annuities are not subject to required minimum distributions (RMDs) unless they are held in qualified plans, such ... Read Full Answer >>
  3. Can variable annuities be rolled into an IRA?

    Variable annuities are often found in government or nonprofit employer retirement plans such as 403(b) or 457(b) plans. With ... Read Full Answer >>
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    When planning for retirement, it is important to have a good idea of how much income you can rely on each year. There are ... Read Full Answer >>
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    Whether your variable annuity is protected from creditors depends on the state in which you live. About three-quarters of ... Read Full Answer >>
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    Variable annuities are tax-deferred. This means an investor does not pay taxes on the interest income from his annuity until ... Read Full Answer >>

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