Individual Retirement Annuity

AAA

DEFINITION of 'Individual Retirement Annuity'

A retirement investment vehicle that is structured similarly to a individual retirement account (IRA), except that in this instance, an annuity contract must be purchased, subject to a number of conditions which must be met. An individual retirement annuity must be issued in the owner's name, and only the annuity owner or their surviving beneficiaries are eligible to receive benefits from the contract. Annuity payments may be made by persons other than the primary holder.

INVESTOPEDIA EXPLAINS 'Individual Retirement Annuity'

A number of specific requirements apply to individual retirement annuities. For instance, the owner's entire interest in the annuity must be fully vested, and the owner is not allowed to transfer any of their balance to another person. These types of investment accounts must allow for flexible premiums, and annual contributions are capped at a specified maximum, which was $4,000 for the 2005 to 2007 period and $5,000 in 2008. Distributions from this type of annuity must be made before April 1 of the year in which the owner reaches the age of 70.5.

RELATED TERMS
  1. Tax-Sheltered Annuity

    A type of annuity that allows an employee to make contributions ...
  2. Annuity Contract

    The written agreement between an insurance company and a customer ...
  3. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  4. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  5. Life Annuity

    An insurance product that features a predetermined periodic payout ...
  6. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
RELATED FAQS
  1. How does a pension income drawdown work?

    While there are similar drawdown plans in the United States, a pension income drawdown plan most commonly refers to a specific ... Read Full Answer >>
  2. What option strategies can I use to earn additional income when investing in the ...

    A risk-averse investor should build his retirement portfolio by putting together a well-diversified portfolio and then regularly ... Read Full Answer >>
  3. What is the difference between a bond's yield rate and its coupon rate?

    An annuity is an investment in which a person receives a fixed sum of money annually. Coupon payments received by a bondholder ... Read Full Answer >>
  4. What is fiduciary liability insurance, and what are its benefits?

    Under the Employee Retirement Income Security Act (ERISA), any individual who manages a employee benefit or pension plan ... Read Full Answer >>
  5. Should I purchase a master limited partnership (MLP) in my retirement account?

    Most investors should not purchase units in a master limited partnership, or MLP, in their retirement accounts. MLPs offer ... Read Full Answer >>
  6. What are the tax implications of owning a master limited partnership (MLP)?

    There are significant tax benefits to owning units in a master limited partnership (MLP), although most investors do not ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Watch Your Back In The Annuity Game

    Find out how to get the upper hand when dealing with this payout challenge.
  2. Savings

    Should Your 401(k) Be In An Annuity?

    Housing your retirement plan inside a variable annuity contract offers some big advantages, but only if you are close to retirement.
  3. Home & Auto

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  4. Options & Futures

    Taking The Bite Out Of Annuity Losses

    If this investment product has caused you sleepless nights, it's time to consider alternatives.
  5. Retirement

    The Cost Of Variable Annuity Guarantees

    These products tempt investors with some impressive benefits - but they come at a price.
  6. Professionals

    Help Parents Avoid This Retirement Savings Blunder

    Parents should make saving for their own retirement a priority over helping with their children’s college costs.
  7. Investing

    Financial Gifts For Grads: Kindergarten To College

    If you really want to help your grad preparing for the future, consider a present that supports their long-term goals—an early start to financial planning.
  8. Retirement

    Find The Top Retirement Cities In South Korea

    South Korea's busy, modern capital, Seoul, has traffic signs in Korean writing only and English is not widely spoken. Check retirees' visa rules closely.
  9. Professionals

    5 Signs That You Have a Lousy 401(k) Plan

    Knowing whether a 401(k) plan is good or not so good is important. This will help participants decide how much to invest and when to demand improvements.
  10. Retirement

    Are We Looking At A Retirement Age Of 70 Soon?

    Other countries have been hiking their retirement age. What would make the U.S. government go in that direction?

You May Also Like

Hot Definitions
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  2. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  3. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  4. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  5. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  6. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
Trading Center