split annuities

  • Under a typical split annuity arrangement, an individual simultaneously buys an immediate annuity for a term certain and a deferred annuity for a single premium. The premium is divided between the immediate and deferred annuities so that, at current interest rates, the deferred annuity’s accumulation value at the end of the immediate annuity’s term certain will approximately equal the total original premium. The "split" annuities were a popular insurance product from the mid-to-late 1980s.

    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).