A contract issued by a life insurance company that provides for tax deferral of investment income until withdrawn from the contract.
Variable annuities offer a choice of investment options.
Backup withholding may be claimed as a credit by taxpayers on their federal income tax return. A collateral assignment is when the ownership rights in a contract or account are transferred from one person to another to serve as collateral for a debt. This transfer is usually made with the provision that the ownership rights revert to the original owner when the debt is repaid. A collateral assignment of a nonqualified annuity is considered a taxable event to the owner of the contract. Since it was previously taxed, your cost basis will not be taxed upon withdrawal.