Payout Phase


DEFINITION of 'Payout Phase'

The phase in an annuity during which payments are made to the annuitant. These are usually paid on a monthly basis and last for the lifetime of the annuitant. The income received from an annuity by a retired investor is considered taxable income.

BREAKING DOWN 'Payout Phase'

When an annuitant is ready to begin receiving payments from his/her annuity, he/she notifies the insurance company of his/her decision to do so. Actuaries use mathematical models and life expectancy tables to compute payment amounts which will last for the life of the annuitant (the longer you wait, the larger your payments will be). Most annuities have a minimum age at which an annuitant can begin the payout phase without incurring an early withdrawal penalty, and they can also include provisions to continue payments until both the annuitant and his/her spouse are deceased.

  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  3. Actuary

    A professional statistician working for an insurance company. ...
  4. Variable Annuity

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

    1. A person who receives the benefits of an annuity or pension. ...
  6. Insurance

    A contract (policy) in which an individual or entity receives ...
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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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