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How does a deferred annuity work?

April 26, 2017Annuity Deferred

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How does a deferred annuity work?

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There are two phases to a deferred annuity: the “accumulation phase” and the “payout phase.” During the accumulation phase you are allowed to contribute money, and these funds are allowed to grow tax-deferred. The payout phase begins when you are eligible and want to start taking distributions from the annuity. There are several payout options either in a lump sum, a series of systematic distributions, or periodic annuity payments for a specified period or for the rest of your life.