What is ‘Qualifying Annuity’
This type of annuity is similar to any other, except that it has been approved by the IRS for use within a Qualfied Retirement Plan or IRA. Qualifying Annuties can be either fixed, indexed or variable, depending upon the investment objectives of the plan sponsor. Contributions made into a Qualifying Annuity are tax-deductible according to ERISA guidelines, unless the plan or annuity has a Roth feature.
Explaining ‘Qualifying Annuity’
Qualifying Annuities are not tax-deductible plans in and of themselves; they must reside within a Qualified Plan or IRA in order to enjoy this status. Qualifying Annuities can be either the sole vehicle inside the plan or account, or they can be one of several other choices that are offered as well. In many cases, the Qualifying Annuity is a variable contract and is the only vehicle offered within the plan, with the variable subaccounts constituting the choices available to plan participants.
Further Reading
- Household ownership of variable annuities – www.journals.uchicago.edu [PDF]
- Developments in decumulation: The role of annuity products in financing retirement – link.springer.com [PDF]
- Household demand for variable annuities – papers.ssrn.com [PDF]
- Annuities and their derivatives: The recent Canadian experience – papers.ssrn.com [PDF]
- Variable annuities versus mutual funds: a Monte-Carlo analysis of the options – www.sciencedirect.com [PDF]
- Betting on death and capital markets in retirement: a shortfall risk analysis of life annuities – www.nber.org [PDF]
- Lifecycle impacts of the financial and economic crisis on household optimal consumption, portfolio choice, and labor supply – www.nber.org [PDF]
- In sickness and in health: An annuity approach to financing long-term care and retirement income – www.jstor.org [PDF]
- Putting the pension back in 401 (k) plans: Optimal versus default longevity income annuities – www.nber.org [PDF]
