Single-premium-deferred-annuity meaning

A tax-deferred annuity purchased by an investor who makes a lump sum payment to the insurance company or mutual fund that sells the annuity. A single-premium annuity is an investment used to fund retirement. If the funds are withdrawn before age 59 1/2, a 10 percent penalty is assessed. The annuity earns interest, while income tax is deferred. The company issuing the annuity promises to pay back the principal on the maturity date as well as make regular interest payments. See also annuity.
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