What term refers to the period of payments into an annuity during which those payments earn interest on a tax-deferred basis?

What term refers to the period of payments into an annuity during which those payments earn interest on a tax-deferred basis?

• A. Accumulation period
• B. Annuity period
• C. Date of annuitization
• D. Single premium

Answer: (A)

It’s the accumulation period—the time during which you fund the annuity and the funds earn interest or investment returns on a tax-deferred basis. During this phase, the money you contribute grows without current taxes on the earnings, so the growth compounds until withdrawal. This contrasts with the payout phase, when payments begin to be distributed, and with the date of annuitization, which is the specific moment you elect to start those payments. A single premium is just a lump-sum funding method, not the growth phase itself.

It’s the accumulation period—the time during which you fund the annuity and the funds earn interest or investment returns on a tax-deferred basis. During this phase, the money you contribute grows without current taxes on the earnings, so the growth compounds until withdrawal. This contrasts with the payout phase, when payments begin to be distributed, and with the date of annuitization, which is the specific moment you elect to start those payments. A single premium is just a lump-sum funding method, not the growth phase itself.