Deferred Annuity


DEFINITION of 'Deferred Annuity'

A type of annuity contract that delays payments of income, installments or a lump sum until the investor elects to receive them. This type of annuity has two main phases, the savings phase in which you invest money into the account, and the income phase in which the plan is converted into an annuity and payments are received.

A deferred annuity can be either variable or fixed.


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BREAKING DOWN 'Deferred Annuity'

Earnings on a deferred annuity account are taxed only upon withdrawal, providing the annuity with a tax benefit. This type of annuity also provides a death benefit, so that the beneficiary of the annuity is guaranteed the principal and the investment earnings.

For example, an investor may choose to defer annuity payments until she retires.

  1. Annuity Contract

    The written agreement between an insurance company and a customer ...
  2. Death Benefit

    The amount on a life insurance policy or pension that is payable ...
  3. Fixed Annuity

    An insurance contract in which the insurance company makes fixed ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  6. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
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  1. How liquid are variable annuities?

    Variable deferred annuities and variable immediate annuities are not considered liquid. Variable deferred annuities carry ... Read Full Answer >>
  2. Do variable annuities have RMDs?

    Variable annuities are not subject to required minimum distributions (RMDs) unless they are held in qualified plans, such ... Read Full Answer >>
  3. Can variable annuities be rolled into an IRA?

    Variable annuities are often found in government or nonprofit employer retirement plans such as 403(b) or 457(b) plans. With ... Read Full Answer >>
  4. How do I calculate the future value of an annuity?

    When planning for retirement, it is important to have a good idea of how much income you can rely on each year. There are ... Read Full Answer >>
  5. Are variable annuities protected from creditors?

    Whether your variable annuity is protected from creditors depends on the state in which you live. About three-quarters of ... Read Full Answer >>
  6. Are variable annuities tax deferred?

    Variable annuities are tax-deferred. This means an investor does not pay taxes on the interest income from his annuity until ... Read Full Answer >>

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