Wraparound Annuity

Filed Under:
Dictionary Says

Definition of 'Wraparound Annuity'


A type of annuity that allows the investor (the holder of the annuity) control in the underlying investments in the annuity plan. An annuity is tax-deferred contract sold my an insurance copany that pays an income benefit on a regular basis for the life of the contract holder, the life of his or her spouse, or some other defined time period. The wraparound option give annuity holder the benefit of choosing the type of investment in the annuity.

Investopedia Says

Investopedia explains 'Wraparound Annuity'


Because the income generated in a wraparound annuity plan is tax-deferred (that is, no taxes are paid until a withdrawal is made), the IRS no longer allows individuals to choose underlying investments for the purpose of evading taxes. The exception is when the annuity holder could not otherwise purchase a type of fund; in other words, the IRS does not allow individuals to shelter funds in the tax-deferred annuity if the underlying investments can be purchased through other means (without a tax deferral).
comments powered by Disqus
Hot Definitions
  1. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  2. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  3. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  4. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  5. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  6. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public.
Trading Center