Coming to Terms
Accumulation period: During this period, all premium
payments are invested in the account.
Annuity: A contract with an insurance company for a
guaranteed, interest-bearing policy.
Death benefit: Proceeds from your annuity pass
directly to your named beneficiary, if applicable.
Penalty tax: The IRS penalty tax is currently 10%,
payable on any withdrawal of interest or qualified premium made prior to age 59ý.
Premium: The original, or principal, contribution
made to the annuity.
State premium tax: Tax imposed on the accumulated
annuity value or purchase payments.
Systematic withdrawal plan: Authorizes periodic,
structured withdrawals by the owner.
Tax deferred: Postponing taxes on interest earnings.
Withdrawals: During the distribution period, all
funds can be withdrawn from the account, by option of the owner, and usually with a
minimum dollar amount.
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