ExpertGlossary

Identity theft is the unauthorized use of your personal information, such as your name, address, Social Security number, or credit account information.

People usually steal your identity to make purchases or obtain credit, though they may also use the data to apply for a driver's license or other form of official identification.

You buy an immediate annuity contract with a lump-sum purchase. You begin receiving income from the annuity either right away or within 13 months.

A fixed immediate annuity guarantees the amount of income you'll receive in each payment, based on the claims paying ability of the insurance company selling the contract.

A variable immediate annuity pays income based on the performance of the annuity funds, or subaccounts, you select from those available through the contract.

Immediate annuities appeal to people who want to convert a sum of money to a source of regular income, either for themselves or for another person. One way they're frequently used is as a source of retirement income.

Imputed interest is interest you are assumed to have collected even if that interest was not paid.

For example, you pay income tax on the imputed interest of a zero-coupon bond you hold in a taxable account even though the interest is not paid until the bond matures.

Similarly, you may be required to pay income tax on imputed interest if you make an interest-free loan, even if that loan is to your children or another member of your family. The government's position, in this case, is that you should have charged interest even though you didn't do so.

Corporate executives may be granted incentive stock options (ISOs), also called qualifying stock options. These options aren't taxed when they're granted or exercised, but only when the underlying shares are sold.

If, after exercising the options, participating executives keep the shares for the required period, any earnings from selling the shares are taxed at the owner's long-term capital gains rate.

However, stock option transactions may make sellers vulnerable to the alternative minimum tax (AMT).

An income annuity, sometimes called an immediate annuity, pays an annual income, usually in monthly installments.

Your income is based on the annuity's price, your age (and your joint annuitant's age if you name one), the term length, and the specific details of the contract. It's also dependent on the annuity provider's ability to meet its obligations.

You might buy an income annuity with assets from your 401(k) plan, or your plan may buy an income annuity on your behalf. In that case, the annuity provider guarantees an income that will satisfy your minimum required distribution.

Income funds are mutual funds whose investment objective is to produce current income rather than long-term growth, typically by investing in bonds or sometimes a combination of bonds and preferred stock.

Investors, especially those who have retired or are about to retire, may prefer income funds to potentially more volatile growth funds.

The amount of income a fund may generate is related to the risk posed by the investments that the fund makes and the return they generate.

A fund that buys lower-grade bonds may provide substantially more income than a fund buying investment-grade bonds. But the same fund may also put your principal, or investment amount, at substantial risk.

Any income your beneficiary receives after your death that would have gone to you if you were still alive is described as income in respect of a decedent.

One example is the income your beneficiary gets as a minimum required distribution from your 401(k) or IRA. In this case, your beneficiary pays tax on that income at his or her ordinary rate, as you would have.