Annuitization is a distribution option that allows a retiree to receive periodic payments rather than a lump sum of retirement funds. Depending on the available options, the payments may be spread throughout the remainder of the retiree's life expectancy, or a specified number of payments can be scheduled.

Normally, once the annuitization option has be selected, the recipient of the funds cannot receive advance payments and must wait until the scheduled time to be paid. If the lifetime payment option is used, the retiree can choose the monthly amount given and will receive the money until the benefit is paid completely. If the fixed term option is chosen, payments are broken up evenly over the specified period of time.

The Risk of Annuities

There are two related risks when choosing annuity payment.s. One risk is that the person could pass away before the full benefit is received, and the other is that they could live longer than expected and lose income later in life. Should a person with lifetime payments die before the complete benefits are paid, a surviving spouse may be entitled to some or all of the remaining benefit. If the spouse does not receive all of the benefit, they will receive half of the money. If there is no spouse or beneficiary registered, the payments will simply stop.

If a fixed term is selected, the money will be paid until the full amount is received. After this has occurred, no more funds will be given and the recipient will need to find another source of income.

Blackout Period

The blackout period is an amount of time in which individuals who have a retirement plan cannot alter anything within their plans. During a particular amount of time, an individual cannot change the investments or the structure of the account. In most cases, a blackout period will last approximately 60 days.

In most cases, a blackout period will coincide with some kind of significant event that has to do with the retirement account. This is common with companies that offer pension plans for their employees. For example, if the pension plan is being restructured or is being moved to another type of pension plan, the company will institute a blackout period. During this time, the account holders do not have the ability to do anything with the money in their accounts. 

Most of the time, this is a very temporary situation and is designed to avoid any confusion with account holders. Even though it can take as long as 60 days, in many cases it will take substantially less than that to complete. The goal of the company is not to restrict their employees from moving money around, but it is to keep everything intact until the necessary changes can be made.