variable annuity

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A variable annuity is an annuity — periodic payments to a recipient — that vary in amount based on the performance of the underlying investments. Variable annuities are tax-deferred and a person does not have to pay any taxes on the income or investment gains until the person withdraws the money.

See, e.g. NationsBank of North Carolina, N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251 (1995)

Compare: fixed annuity

[Last updated in March of 2022 by the Wex Definitions Team]