Investment In The Contract


DEFINITION of 'Investment In The Contract'

As this term applies to annuities, the principal amount that the contract owner has invested in the contract. The investment in the contract can be made as a series of payments or in a single lump sum. This term generally applies to fixed, indexed and variable annuities alike.

BREAKING DOWN 'Investment In The Contract'

Any amount of money withdrawn from an annuity that is in excess of the investment in the contract is considered a taxable distribution. Investors who annuitize their contracts will see a portion of each payment they receive classified as a return of principal or investment in the contract. This portion of each payment is considered a tax-free return of principal.

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    You can borrow from your annuity to put a down payment on a house, but be prepared to pay an assortment of fees and penalties. ... Read Full Answer >>
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    There are two broad categories of annuity: fixed and variable. These categories refer to the manner in which the investment ... Read Full Answer >>
  3. What are the risks of rolling my 401(k) into an annuity?

    Though the appeal of having guaranteed income after retirement is undeniable, there are actually a number of risks to consider ... Read Full Answer >>
  4. How do I get out of my annuity and transfer to a new one?

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  5. Are Cafeteria plans exempt from Social Security?

    Typically, qualified benefits offered through cafeteria plans are exempt from Social Security taxes. However, certain types ... Read Full Answer >>
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