Deferred Payment Annuity

Deferred payment annuity

An annuity that stipulates payments be made to the annuitant at a later date, such as when the annuitant reaches a certain age.

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Deferred Payment Annuity

An annuity in which the annuitant does not begin to receive payments until some future date. A deferred payment annuity has two phases, a savings phase and an income phase. During the savings phase, the annuitant places money into the annuity, which invests it on behalf of the annuitant. In the income phase, the annuitant receives payments. Usually, deferred payment annuity is not taxed until the income phase begins. It also pays a death benefit to the survivor(s) of the annuitant. Nearly all retirement plans are deferred payment annuities. See also: IRA, 401(k).