single-premium deferred annuity

Single-Premium Deferred Annuity (SPDA)

An IRA-like annuity into which an investor makes a lump-sum payment that is invested in either a fixed-return instrument or a variable-return portfolio, which is taxed only when distributions are taken.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Single Premium Deferred Annuity

An annuity purchased with a lump sum payment by the annuitant, who does not begin to receive payments until some future date. Like all deferred annuities, an SPDA has two phases, a savings phase and an income phase. The savings phase involves the annuity taking the lump sum payment and investing it on behalf of the annuitant. In the income phase, the annuitant receives payments. It is important to note that an SPDA, like all deferred annuities, is not taxed until the income phase begins. It also pays a death benefit to the survivor(s) of the annuitant. See also: IRA, 401(k).
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

single-premium deferred annuity

A deferred annuity purchase having one lump-sum premium payment. Single-premium deferred annuities offer the tax benefit of increasing in value tax-free until distribution takes place. Thus, an investor could pay a large single premium, have the investment build up free of taxes for a period of years, and then receive partially taxable annuity payments at retirement. A single-premium deferred annuity is more flexible than an individual retirement account, but unlike contributions by some individuals to an IRA, a premium to purchase a deferred annuity is not deductible for tax purposes. Compare periodic purchase deferred contract.
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.
References in periodicals archive ?
Eric Steigerwalt, the head of the Brighthouse unit, said sales of the company's Shield Level Selector single-premium deferred annuity have been fantastic.
Is it best to attach LTC coverage to a deferred annuity with a guaranteed minimum withdrawal benefit feature, a straight single-premium deferred annuity, a deferred annuity with a guaranteed minimum income benefit feature, or an immediate annuity?
Available to those aged 60 to 85, the tool allows prospects to exchange their annuity for a single-premium deferred annuity with a seven- to 15-year payout; the payments then fund a universal life insurance policy with a guaranteed tax-free death benefit that will always be larger than the value of the original deferred annuity.
The single-premium deferred annuity offers guaranteed periods of three, five, seven or 10 years.
Nationwide's InvestCare is a single-premium deferred annuity that provides lifelong long-term-care coverage.
American Enterprise Life, the issuer of the new Wells Fargo variable annuities, primarily markets single-premium deferred annuity contracts through financial institutions.
* Berkshire Hathaway Life Insurance Company of Nebraska has BHLN Direct, which provides quotes for a single-premium immediate annuity and a single-premium deferred annuity.

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