Individual Retirement Annuity


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.

BREAKING DOWN '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.

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  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Who can make catch-up contributions?

    Most common retirement plans such as 401(k) and 403(b) plans, as well as individual retirement accounts (IRAs) allow you ... Read Full Answer >>
  3. Can you have both a 401(k) and an IRA?

    Investors can have both a 401(k) and an individual retirement account (IRA) at the same time, and it is quite common to have ... Read Full Answer >>
  4. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  5. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  6. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>

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