Deferred annuities work a lot like the individual retirement accounts (IRAs) and 401(k)s you’re probably more familiar with. So long as your money is in the deferred annuity, you don’t owe income taxes on your gains. … Because of these tax and fee implications, deferred annuities are best used as a long-term investment.
What is an example of a deferred annuity?
With deferred annuities, you can receive a lump sum or an income stream at retirement or at another time when funds are needed. … For example, someone who is 50 years old might purchase a deferred annuity with the intention of receiving income at the age of 65 or even at 80.
What is the meaning of deferred annuity?
A deferred annuity is an insurance contract that guarantees retirement income at a future date. Deferred annuities differ from immediate annuities in that income payments are delayed until the date specified in the insurance contract. Earnings on the premium grow tax-deferred until the money is withdrawn.