A distribution of money that is earned on an investment on a set schedule such as quarterly, biannually, or annually is known as an annuity. Typically, an annuity is used as part of a retirement plan. Once the annuitant, or recipient, stops working,  an annuity ensures a fixed and stable income. An annuity may be designed such that it provides income for two.

Retirement Pension – A form of Annuity

Retirement pension is a common form of annuity. At the time when the retiree was working, he or she paid into a pension fund which was invested. After the job is over and the person is retired, the return on the investment is transformed into an annuity which is distributed to the retiree.

How does Annuity works?

The annuitant has the choice to either invest in installments, or purchase an annuity having a lump sum. Annuity is not like life insurance, as it does not require a physical examination. Rather than rather funding surviving children or partners, annuity is used to fund the individual during his or her lifetime, except in certain situations .

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In few countries, large enough gift are given by people or they transfer their property to others while they are still living, they may require to pay a gift tax. For instance, in the US, the Internal Revenue Service (IRS) has made specific rules about the amount that a person can give to someone else without incurring this tax. In IRS publications there are also guidelines for what is considered a gift, and for the amount of tax that will be incurred which will be based on the value of the gift.

IRS Tax Law

Where a gift tax rules are applied, a person might be allowed to give gifts of a certain amount before that the beneficiary has to pay a gift tax. For instance In IRS law, without paying a gift tax you can give an individual a gift of about $13,000 US Dollars (USD) per year. A husband and wife may both give the same person this gift, which will be a total of $26,000 USD per year. This amount could be changed by IRS, so it is advisable that you check tax law for current allowable amounts.

Gifts on which Tax is not applied

Usually the person that is giving the gift pays the tax, though there are certain circumstances where the person who is receiving the gift can arrange to pay the tax instead.

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New economic realities brings its own dictionary. Your Money Mogul listed new meanings of old financial terms. Forget the losses you made and enjoy yourself.

CEO — Chief Embezzlement Officer.

CFO — Corporate Fraud Officer.

BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING — The art of buying low and selling lower.

P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.

BROKER — What my broker has made me.

STANDARD & POOR — Your life in a nutshell.

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