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Author: peppermintpatty Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19553  
Subject: Re: annuity question Date: 12/13/2001 9:51 PM
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Randall asked -

"I have a question about annuities I'm hoping someone can answer. Once the annuitization process begins and the annuitant starts receiving payments, will his or her account still be growing tax-deferred each year or does the tax-deferred "feature" end once annuitizing begins?"

When you "annuitize" your contract you give up access to the remaining lump sum, turning it over to the insurance company who guarantees your new contract (for a lifetime, a period certain, or a combination). A very modest interest is included in the sum of the payments. Each payment you receive includes both a return of principle + interest earned. The insurer will report these figures to you & the IRS. You will pay tax on the earned interest!

Hope this helps...

Regards, PP

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