Delayed Annuity

A pet peeve many people share is a distaste for the act of “double dipping.” Whether it’s someone dipping their potato chip for a second time after taking a bite, or the IRS trying to hit your wallet for a second time, double dipping is not something that others will usually approve of.

Annuities have a tax treatment that is similar to a Roth IRA if post tax earnings are used to fund them. Only profits can be taxed, rather than principal, in order to avoid IRS double dipping. Delayed annuities differ from normal (or immediate) annuities, in that their accumulation and distribution phases have much more flexibility. Funding can be done in lump sums as well as regular contributions, and distributions can be delayed at the beneficiary’s discretion, and can be for varying amounts, instead of specific amounts on a fixed schedule.