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February 17, 2009

Annuitization Phase

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Definition

The period during which an annuitant receives annuity payments from an annuity or other financial product.

For retirement plan purposes, distributions from defined benefit pension plans, money purchase pension plans and target benefit plans are usually paid in the form of an annuity. For these plans, the annuitization phase is during the participant’s retirement, where benefits are ( usually) paid in the form of an annuity. For married participants, the benefits are usually paid in the form of a QJSA.

Forms of annuity payments include:

  • Straight life (or single life) annuity payments, where an annuity is payable in equal installments for the life of the participant, and terminates upon the participant’s death.
  • Qualified joint and survivor annuity, where an annuity is payable for the life of the participant with a survivor annuity for the life of the spouse
  • Joint and survivor annuity, where an annuity is payable for the life of the participant with a survivor annuity for the life of a beneficiary who is not necessarily the spouse of the participant   

Participants can elect to waive out of the annuity payments, and receive benefits in the form on lump-sum payments.

 

Referring Cite

Annuity contract , account agreement, plan document, or  summary plan description

Additional Helpful Information

The terms of the annuity contract usually defines the annuity phase, including the beginning and duration

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