variable annuity

  • An annuity in which the dollar amount of the periodic payments is based on the earnings and asset value of the investment portfolio underlying this class of annuities; variable annuities will pay a monthly amount which will fluctuate according to investment results (of either the company issuing the contract or a particular segregated asset account). This then differs from an ordinary or fixed dollar annuity under which the amount of the annuity benefits is guaranteed irrespective of the company’s actual investment earnings.

    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).