Tax-Deferred Annuities: 3 Options for Retirement Savings

Contributing to a tax-deferred annuity can provide you with some definite benefits when you are planning for your retirement. Here are some of the options that you have when it comes to contributing to a tax-deferred annuity.

1. 401k Plan

Many investors that contribute to a 401k through their employer have the option to get involved with a tax-deferred annuity. Insurance companies often contract with 401k providers in order to offer this option to investors. You will be able to designate a specified portion of your retirement funds towards the purchase of this type of annuity.

2. Periodic Payments

Many individuals also choose to purchase a tax-deferred annuity on their own through the use of periodic payments. With this type of arrangement, you will set up an annuity contract on your own with an insurance company. You will then make regular, periodic payments to the insurance provider in the form of premium payments. Your money is going to grow tax-deferred over the years, until you are ready to start accepting annuity payments.

3. Lump Sum Payments

If you suddenly come into the possession of a large amount of money, you can also use this to purchase a tax-deferred annuity. You can purchase the annuity and then allow the money to grow tax-free.