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A deferred annuity is a contract that delays annuity payments, unlike a regular annuity, until a certain period of time which has been selected by the investor. A deferred annuity typically has two main stages. The first stage of a deferred annuity is an accumulation stage, where the investor puts money into the account. The second stage is the income stage, which occurs after the specified date chosen by the investor. During this stage of the deferred annuity, the plan is converted so that payments are received. A deferred annuity may be either fixed or variable in terms of its payments. These earnings of the deferred annuity are only taxed when withdrawn, but early withdrawals may very well be penalized in some way. A deferred annuity is generally used as a way to create income for retirement.
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