A SPIA is a contract between you and an insurance company designed for income purposes only. Unlike a deferred annuity, an immediate annuity skips the accumulation phase and begins paying out income either immediately or within a year after you have purchased it with a single, lump-sum payment.

How long payments can be delayed in a deferred annuity?

2 As mentioned, you can defer the annuity indefinitely, if you choose, or you can elect to receive payments in a number of different ways: Lump-sum, which is one, taxable payment. Systematic withdrawal, in which taxable withdrawals are made periodically while the remaining funds earn interest.

How does a single premium deferred annuity work?

That growth occurs on a tax-deferred basis until annuitization, at which time regular payments will begin. Single-premium deferred annuities can be either fixed or variable, and distributions are only taxed when you take them. There is no investment limit governing how much an individual may invest in an SPDA.

What are the advantages and disadvantages of deferred annuities?

Single premium deferred annuities are purchased with one sum of money in one payment. Unlike premiums for immediate annuities, which must be paid in one installment, premiums for deferred annuities can be spread over time in a series of payments. There are advantages and disadvantages with single premium deferred annuities.

Is the payment stream of a single premium annuity variable?

Most of the SPIAs purchased today are fixed SPIAs. If your single premium immediate annuity is variable, which means it contains market risk, then your payment stream could decline based on changes to the subaccounts that are invested in risk-based assets.

What is a single premium immediate annuity ( SPIA )?

An immediate annuity, also known as an income or single premium immediate annuity (SPIA), is a contract between you and an insurance company designed for income purposes only.