Annuity Payment Option

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Annuity Payment Option

Either of two ways that one may elect to receive payments from an annuity. One may receive a fixed dollar amount each month, guaranteeing payments but exposing the annuitant to inflation risk. On the other hand, one may decide to receive variable payments, tying payments to the performance of some underlying portfolio. One generally decides which annuity payment option one wishes to receive upon purchasing the annuity.

References in periodicals archive ?

To boost annuitization rates among retirees, the authors recommend that plan sponsors reduce search costs by incorporating life annuities into defined contribution retirement accounts as well as presenting participants a number of lifetime annuity payment options.

Award-winning paper highlights demand for life annuities

Although defined benefit plans must offer annuity payment options under federal tax law, 401(k) plans and most other types of defined contribution (DC) plans are not subject to this requirement.

Similarly, a 401(k) plan could be amended to offer annuity payment options, and to provide for the purchase and distribution of individual annuity contracts to electing participants.

Income Options

They have developed into an attractive insurance product that offers a comfortable middle ground between fixed income predictability and equity portfolio exposure, while still preserving other valuable features, such as death benefits and guaranteed annuity payment options.

Flexibility keys interest in today's indexed annuities: boomers seeking guaranteed income and growth potential help IA activity grow

Cash balance plans also provide the same type of annuity payment options that traditional plans offer.

Distribution of retirement income benefits: lump sums have become more popular as an alternative to annuity payments in defined benefit retirement plans and remain the prevalent distribution option in defined contribution plans. (Distribution of Retirement Income)