Deferred Income Annuity

Deferred Income Annuity (DIA)

Investor Risk Profile: Low

Protection Level Provided: High

Funding Sources: Qualified retirement accounts, like a 401(k) or IRA

Deferred income annuities (DIAs) are designed to bridge an income gap and maintain an income floor to cover basic expenses in retirement. Funded through a lump-sum payment, or premium, in exchange for payments at a later date, DIAs can serve as a “personal pension,” providing an income stream for investors without a defined benefit plan through their employer.  

Consider a DIA when your client needs:

Guaranteed Lifetime Income: DIAs are designed to manage longevity risk by generating an income stream that clients cannot outlive.  

Deferred Income: These highly customizable products provide the annuitant with income payments (monthly, quarterly, or yearly) for life or a defined period, based on the annuity payout options.  

Tax Relief Potential: If a DIA acts as a qualified longevity annuity contract (QLAC), it can help the owner delay required minimum distributions (RMDs), potentially lowering their tax burden.

Disclosures:

The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan. In addition to surrender charges, withdrawals are subject to income tax.

Withdrawals prior to age 59 1/2 may also be subject to a 10% federal tax penalty.