Glossary
SPDA (Single Premium Deferred Annuity)
A Single Premium Deferred Annuity (SPDA) is a type of annuity contract where you make a one-time lump-sum payment to an insurance company, and the funds grow tax-deferred until you start receiving income payments at a future date—typically during retirement.
How does an SPDA work?
You pay a one-time premium, and the insurer invests the funds. The value grows tax-deferred, and at a chosen time—often retirement—you can begin receiving regular income payments.
What are the benefits of an SPDA?
SPDAs offer tax-deferred growth, predictable income, and protection from market volatility. They’re often used as part of a retirement income strategy.
When can I access the money in an SPDA?
Withdrawals typically begin at retirement age, but taking money out before age 59½ may incur IRS penalties in addition to income tax.
Is an SPDA right for everyone?
SPDAs are best suited for individuals who have a lump sum to invest, don’t need immediate income, and want to grow funds tax-deferred for future retirement needs.
Are SPDAs guaranteed?
Fixed SPDAs offer guaranteed interest rates, while variable SPDAs depend on market performance. All guarantees are backed by the financial strength of the issuing insurer.
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