deferred annuity


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Deferred Annuity

An annuity in which the annuitant does not begin to receive payments until some future date. A deferred 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. It is important to note that a deferred 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 annuities. See also: IRA, 401(k).
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

deferred annuity

An annuity that is not scheduled to begin payments until a given date. These annuities may be purchased with a single payment or, as is more often the case, with a series of periodic payments. Deferred annuities are most commonly purchased by individuals who want to make periodic payments during their working lives in order to receive monthly or annual income payments from the annuities during their retirement. Compare immediate annuity. See also periodic purchase deferred contract, single-premium deferred annuity.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Deferred annuity.

A deferred annuity contract allows you to accumulate tax-deferred earnings during the term of the contract and sometimes add assets to your contract over time. In contrast, an immediate annuity starts paying you income right after you buy.

Your deferred annuity earnings can be either fixed or variable, depending on the way your money is invested.

Deferred annuities are designed primarily as retirement savings accounts, so you may owe a penalty if you withdraw principal, earnings, or both before you reach age 59 1/2.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
For the deferred annuity option, the relevant period is 10 years.
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The association is also to meet Bank Negara Malaysia and the Finance Ministry on the 2013 Budget proposal to remove investment income tax on deferred annuity, and the introduction of new group insurance schemes.
Prior to this ruling, there was a concern that the spousal consent requirement might apply to a 401(k) participant who invested in a deferred annuity. The ruling clarifies the situations in which spousal consent will not be required before the annuity begins, thereby eliminating another obstacle for plan sponsors who want to use deferred annuities.
Client transfers cash to the trustee of the trust who purchases a deferred annuity contract with the estate owner as the annuitant.