Business and Personal Finance Dictionary

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• INCOME ANNUITY
  
  An income annuity, sometimes called an immediate annuity, pays an annual income, usually in monthly installments. The amount you receive is determined by the purchase price of the contract, your age (and the age of your beneficiary if you name one), the term over which the annuity will be paid, and the specific details of the contract. You might buy an income annuity with assets from your 401(k) plan, or your plan may buy an income annuity on your behalf. The annuity provider guarantees an income that will satisfy your minimum required distribution.
  
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