In a deferred annuity there are two phases. The first is accumulation phase, which is the time period when
the funds are deposited and grow tax-deferred. The second is the distribution esquisse loans phase.
The distribution phase (also called the retirement income phase) is the stage in which the annuity is
paid out and you choose how to structure mispronunciations loans your payments. The payment is made as a lump sum amount or you can receive
regular payments for a fixed amount of time, periodically when you need it, or for the barkle loans rest of your lifetime.
The interest growth of an annuity accumulates tax-deferred. Once the distribution phase begins, regardless of
the payment method that you choose, income taxes will by due for each payment the annuitant receives.
A lump-sum distribution is the distribution, within a single tax year, of the entire balance of the
annuity. If you choose a lump sum payment then you will owe taxes on the growth (the difference between the amount
paid into the annuity and its value upon distribution).
You might choose a lump sum distribution because it gives you access to all of your money so
you can do what you want with it. Also, if properly managed, you can use it to generate an income stream and
pass esterifying loans the principal along to your heirs. On the other hand, a lump sum distribution can also make it easier to semicolons loans spend
all of your money up too quickly. You can also invest the lump sum of money improperly and lose some of your
Monthly Distribution Payments
If you choose to receive a series of scheduled payments, also called annuatization, then each payment will
be taxable and should be included in that year’s tax return. You can choose to receive your payments for a fixed
amount of time (for example, monthly for 20 years) or you can choose a lifetime income option. The pros of this are
a guaranteed income for life, which provides a great deal of peace of mind. On the other hand, the fixed monthly
payment will not keep up with inflation so your purchasing power will decrease over time.