Single-Premium Deferred Annuity - SPDA


DEFINITION of 'Single-Premium Deferred Annuity - SPDA'

A type of annuity contract that is established with a single lump-sum payment by the owner. The annuity then grows on a tax-deferred basis until annuitization. Single-Premium Deferred Annuities (SPDA) can be either fixed or variable, and distributions are only taxed when you take them. There is no investment limits regarding how much you wish to invest in a SPDA.


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BREAKING DOWN 'Single-Premium Deferred Annuity - SPDA'

Single Premium Deferred Annuities (SPDA) differ from immediate contracts in that they grow tax-deferred for a period of time before annuitization. They also differ from flexible-premium contracts where the investor makes multiple payments into the contract over a period of time while the assets grow. SPDA is appropriate for investors who need steady income and have a lump-sum balance to invest.

  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
  3. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Variable Annuity

    An insurance contract in which, at the end of the accumulation ...
  6. Crowding Out Effect

    An economic theory stipulating that rises in public sector spending ...
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