deposit administration (da) contracts

  • A DA contract is a group annuity contract issued to an employer to fund retirement benefits for its employees. Under a typical contract, an employer deposits funds at interest with a life insurance company, and then makes withdrawals from the deposit fund to buy retirement annuities for retiring employees. The DA contract often contains permanent annuity purchase rate guarantees under which the life insurance company permanently guarantees that each $1,000 of fund value will be able to buy at least a certain amount of annual annuity benefits.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).