Income annuity

Income Annuity

A fixed or variable annuity that pays a certain monthly or (rarely) annual sum for the term of the annuity. The payments begin as soon as the annuitant buys the annuity. Usually, the annuity's term is the remainder of the annuitant's life, and sometimes the life of his/her surviving spouse, depending on the nature of the particular contract. An income annuity is usually purchased for a lump sum, and is designed to provide a stable income for the annuitant, generally in retirement. See also: Lifetime annuity, Pension.

Income annuity.

An income annuity, sometimes called an immediate annuity, pays an annual income, usually in monthly installments.

Your income is based on the annuity's price, your age (and your joint annuitant's age if you name one), the term length, and the specific details of the contract. It's also dependent on the annuity provider's ability to meet its obligations.

You might buy an income annuity with assets from your 401(k) plan, or your plan may buy an income annuity on your behalf. In that case, the annuity provider guarantees an income that will satisfy your minimum required distribution.

References in periodicals archive ?
Because income annuities produce the highest level of guaranteed income per dollar of assets, the average retiree would need to save about one-third more to replicate the power of the lifetime income annuity.
Deferred income annuity (DIA) sales fell 30 percent in the fourth quarter to $575 million.
BANKING AND CREDIT NEWS-July 19, 2016-Bankers Life launches guaranteed lifetime income annuity
M2 EQUITYBITES-July 19, 2016-Bankers Life launches guaranteed lifetime income annuity
You should suggest that the client consider "carving out" $125,000 and placing it into a QLAC IRA deferred income annuity, which will start lifetime payments at age 85 with a guarantee of 15 years.
Now, however, some well-prepared clients have a new option in using deferred income annuities to double the otherwise available payouts late in life, when the risk of outliving savings is the greatest--by choosing a no-refund deferred income annuity.
Low interest rates impacted single premium income annuity (SPIA) sales in the second quarter.
In reality, however, this form of longevity insurance is only one type of deferred income annuity, and many DIAs allow the client to choose to start receiving income within as little as 13 months-or as long as 45 years-after purchasing the contract.
If you can convert a portion of your assets into an income annuity, you're essentially giving yourself a raise in retirement but still retaining the remainder of your assets for a rainy day or for your heirs or whatever you're planning on doing with your money.
Question 373 explains the basic treatment of a deferred income annuity, and tells us that payments under the annuity contract can be deferred until some point in the future--and that no taxes are incurred until the contract owner begins to receive payments.