• A deferred annuity is an insurance contract that promises to pay the buyer a regular income or a lump sum of money some day in the future. In contrast, immediate annuities start paying immediately.

  • Deferred annuities come in several different types—fixed, indexed, and variable—which determine how their rate of return is calculated.
  • Withdrawals from deferred annuities may be subject to restocking fees as well as a 10% tax penalty if the owner is under 59½.