Deferred Annuity: 7 Retirement Savings Plans

Shawn Plummer

CEO, The Annuity Expert

What is a Deferred Annuity?

A tax-deferred annuity is a retirement savings plan designed for accumulating money (cash value) with the option of converting retirement savings into a source of guaranteed income for life. Deferred annuities will grow on a tax-deferred basis, just like a 401k or IRA.

These annuities are the opposite of immediate annuities.

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How Do Deferred Annuities Work?

Deferred Annuities, also known as delayed annuities, work in 2 different phases:

Accumulation Phase

The accumulation period is the period the deferred annuity accumulates wealth before receiving an income.

Distribution Phase:

The distribution period refers to when a policy owner either annuitize their annuity or turns on the optional lifetime income rider to start receiving annuity payments or lifetime withdrawals from the insurance company.

Tax-Deferred Annuity Types

Single-Premium Deferred Annuity

Single-premium deferred annuities (SPDA) are the type of annuities that can be purchased with one monetary deposit.

You can find single premium deferred annuities here.

Flexible-Premium Deferred Annuity

Flexible-premium deferred annuities are tax-deferred annuity plans that allow an owner to contribute additional funds to an existing policy during the contract’s accumulation period. If funds are added to a flexible-premium annuity, the insurance company typically invests the added funds in a fixed account until the following anniversary or annual reset period.

You can find flexible premium deferred annuities here.



Most deferred annuities allow for penalty-free withdrawals, systematic withdrawals, and waivers to assist in health-related issues like terminal illness, nursing homes, or home health care.

Annuitizing a deferred annuity with giving up all control over the asset with no liquidity.

Death Benefit

The remaining accumulation value in deferred annuities will transfer to the beneficiaries in a lump sum. A spouse may continue the annuity through spousal continuation. Depending on how payments were structured, the beneficiary will receive either remaining annuity payments or no death benefit if the annuity has been annuitized.


Deferred annuities offer tax advantages. Tax deferral means not paying federal income tax now but in the future when income is taken from the annuity.


Deferred annuities offer many types of optional riders, waivers, and benefits, including:

Single Premium Deferred Annuity Pros And Cons



  • Deferred annuities are long term contracts, ranging from 2 to 20 years in length.
  • Some annuities charge hefty fees.
  • Liquidity is limited in annuities.
  • Annuity owners can’t collect income from their deferred annuity until age 59 ½ without being subject to a 10% tax penalty.
  • Annuity owners have to fill out another application which could be approved or disapproved.

Deferred Annuity At A Glance

Fixed Index
Principal ProtectionNoYesYesYesYes
Access To PrincipalYesYesYesNoNo
Control Over MoneyYesYesYesNoNo
Tax-Deferred GrowthYesYesYesNoNo
Guaranteed GrowthNoYesYesNoNo
Guaranteed IncomeYesYesYesYesYes
Inflation ProtectionYesYesNoYesYes
Death BenefitYesYesYesYes/NoYes/No
Long-Term Care HelpYesYesYesNoNo

Deferred Annuity Quotes and Questions

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At The Annuity Expert, we strive to help you make confident financial decisions regarding annuities. Content provided is created by an independent licensed financial professional.

The Annuity Expert is an online insurance agency that provides the widest variety of annuities in the United States. When you buy an annuity directly from us, we receive a predetermined commission from the insurance company (not you). While your annuity is active, clients are not charged any servicing or management fees. Learn more.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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