Payout Phase

Definition

  • The phase of an annuity where income payments begin to be made to the annuitant, usually in monthly instalments. Income payments received in the payout phase of an annuity are taxable, but because of the tax-deferred nature of annuities, the annuitant will generally be retired, and consequentially in a lower tax bracket, by the time payments are received. Also known as the "income phase" or "annuity phase."

Synonyms
annuity income phase, annuity phase, annuity income period, income period, annuity payout phase, income phase, annuity period, payout period, annuity payout period

Related Terms and Acronyms

  • Accumulation Period (AP) Acronym, Important,
    • The period where an investor continues to put money into his or her investment(s).
  • Annuity Definition,
    • A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
    • A financial instrument that disperses a number of payments over a set period of time.
  • Annuity Certain Definition,
    • A type of annuity that makes payments to the annuitant for a set term; payments stop when the agreed upon term ends, even if the annuitant is still alive after the term ends.
  • Deferred Annuity Definition,
    • An annuity that makes payments to the annuitant at some date in future instead of immediately.
  • Guarantee Period Definition,
    • A time period where income payments from an annuity are guaranteed.
  • Immediate Payment Annuity Definition,
    • An annuity where payments to the annuitant start immediately after the annuity has been set up.
  • Instalment Definition,
    • The regular periodic payment that a borrower agrees to make the lender.
  • Investment in the Contract Definition,
    • The principal that has been contributed to an annuity.
  • Life Expectancy Method Definition,
    • A method of calculating the appropriate size of payments in an annuity's income phase by estimating the annuitant's life expectancy.
  • Private Annuity Definition,
    • An arrangement where one party agrees to transfer ownership of an asset to another party (usually a beneficiary) in exchange for lifetime payments.
  • Split-Funded Annuity Definition,
    • Two annuities purchased together, one with a deferred payout and the other with an immediate payout.
  • Substandard Health Annuity Definition,
    • An annuity with increased income payments for people with shorter life expectancies due to medical conditions.
  • Tax Deferred Annuity (TDA) Acronym, Important,
    • A type of annuity where taxes are deferred until the annuitant decides to withdraw money from the annuity.
    More commonly known as a Tax Sheltered Annuity (TSA).
  • Tax Sheltered Annuity (TSA) Acronym, Important,
    • An arrangement where employees are given the option to make tax-deferred contributions to an annuity set up by their employer.
    See also Tax Deferred Annuity (TDA).
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