Single-Premium Deferred Annuity - SPDA

Loading the player...

What is a 'Single-Premium Deferred Annuity - SPDA'

A single-premium deferred annuity (SPDA) is 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.

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.

RELATED TERMS
  1. Deferred Payment Annuity

    An annuity where the payments received will start some time in ...
  2. Annuity

    A financial product that pays out a fixed stream of payments ...
  3. Immediate Payment Annuity

    An annuity contract that is purchased with a single lump-sum ...
  4. Deferred Annuity

    A type of annuity contract that delays payments of income, installments ...
  5. Whole Life Annuity Due

    A financial product sold by insurance companies that requires ...
  6. Valuation Period

    The time between the end of the business day of the first business ...
Related Articles
  1. Investing

    Annuities: The Good, Bad and the Ugly

    Annuities suffer from a few perception problems. This primer that covers the good, the bad and the ugly of annuities.
  2. ETFs & Mutual Funds

    Annuities

    What annuities are: Insurance products that provide a source of monthly, quarterly, annual or lump sum income during retirement. Pros: Tax-deferred growth of earnings; no annual contribution ...
  3. Retirement

    Buying Annuities in a Low Interest Rate World

    Learn if buying an annuity makes sense in a low interest rate environment. Also discover the different types of annuities and how interest rates affect them.
  4. Markets

    Explaining Types Of Fixed Annuities

    Learn about this popular retirement tool, its pros and cons and how annuities work to create a guaranteed regular stream of retirement income.
  5. Financial Advisor

    Advising FAs: Explaining Annuities to a Client

    Conceptually speaking, annuities can be thought of as a reverse form of life insurance.
  6. Retirement

    Managing Annuity Distributions in Retirement

    Strategies to help manage taxable deferred annuity distribution in retirement.
  7. Retirement

    How a Fixed Annuity Works After Retirement

    These popular investments can provide a steady stream of income during your retirement years. Here are the details.
  8. Retirement

    Maximize the Tax Benefit from Your Annuity

    Understand how nonqualified annuities are taxed during your lifetime, and how they are taxed when passed on to your beneficiaries.
  9. Retirement

    Are Annuities Retirement-Only Investments?

    Learn more about why annuities are generally purchased and the way that they can positively and negatively affect an individual preparing for retirement.
  10. Financial Advisor

    Annuities and Baby Boomers: The Pros and Cons

    The pros and cons of annuities that Baby Boomers seeking retirement income need to know.
RELATED FAQS
  1. What is the difference between an individual retirement account and an individual ...

    All these years I thought I had a "regular" IRA (I made $22,000 pre-tax deposits spring of 1985 and 1986), now the company... Read Answer >>
  2. What are the main kinds of annuities?

    Learn about the four basic types of annuities, and why the different investment and payout options are suitable for different ... Read Answer >>
  3. How liquid are variable annuities?

    Understand whether variable annuities are liquid. Learn more about the two types of variable annuities and which is more ... Read Answer >>
  4. For what types of financial instruments would I want to calculate the present value ...

    Learn about the types of financial instruments the present value of an annuity calculation is most useful for, including ... Read Answer >>
  5. What are the risks of annuities in a recession?

    Distinguish between the most common types of annuities, and understand which types of annuities pose the most risk during ... Read Answer >>
  6. What is the difference between a fixed and variable annuity?

    Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center