Annuitization

Annuitization

The reception of monthly payments from an annuity after an accumulation period. Depending on the type of annuity, one may annuitize payments for a period of time or for the remainder of one's life.

Annuitization.

Annuitization means that you convert part or all of the money in a qualified retirement plan or nonqualified annuity contract into a stream of regular income payments, either for your lifetime or the lifetimes of you and your joint annuitant.

Once you choose to annuitize, the payment schedule and the amount is generally fixed and can't be altered.

If you have a qualified retirement plan, such as a 401(k), you generally have three major options when you retire. You can annuitize, roll over the account balance to an IRA, or take the money all at once as a lump sum distribution.

If you have a nonqualified deferred annuity, you have a choice of annuitizing, taking a lump sum, setting up a systematic withdrawal plan, or arranging some other payout method that the contract allows.

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References in periodicals archive ?
The presence of this bequest motive results in an upward shift of the annuitization frontier.
Optimal gradual annuitization: quantifying the costs of switching to annuities
2002-62, the Service modified Notice 8925, Q&A-12, to allow taxpayers who chose a fixed annuitization or a fixed amortization method to calculate their substantially equal periodic payments, to change to the required minimum distribution (RMD) method, without incurring a penalty.
IRS allows one-time RMD-method change
This exception, which may be referred to as annuitization of the plan, will be treated further when solutions to the problems of IRAs are discussed.
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He said product designers will also be thinking of new ways to make annuitization available to the participants in 401(k) plans.
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FIAs' flexibility extends to the annuitization and 1035 exchange options, Klein added.
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A lower total score favors annuitization or pension while a high score favors non-annuitization or taking the lump sum.
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Critics of annuitization might oppose this strategy by citing one of two common myths.
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This article investigates the distributional consequences of mandatory annuitization.
Mortality heterogeneity and the distributional consequences of mandatory annuitization
In addition, estimation results for consumption functions with respect to various kinds of wealth suggest that the annuitization of wealth because of the maturing of public pensions and the introduction of reverse annuity mortgages is likely to further decrease the savings rate in the future.
Chun
A variable annuity will continue to have additional applications when new annuitization features (or the surrender of capital accumulation in exchange for a cashflow stream) are appropriate for specific clients.
Variable annuities and current tax law

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