Single premium annuities are funded entirely with one upfront payment, after which the contract is closed to additional contributions. This structure is ideal for those with a significant amount of money to invest at once.
Common sources for single premium funding:
- 401(k) or 403(b) rollovers at retirement
- Traditional or Roth IRA transfers
- Pension lump-sum distributions
- Inheritance or life insurance proceeds
- Sale of a business or real estate
- Substantial savings accumulation
Advantages of single premium:
- Simplicity—one payment, done
- Immediate full funding for maximum growth potential
- Often qualifies for better contract terms
- Cleaner for tracking and administration
Single premium annuity types:
- Single Premium Immediate Annuity (SPIA): Income begins immediately
- Single Premium Deferred Annuity (SPDA): Income begins at a future date
- Most fixed indexed annuities are single premium
Considerations:
- Must have funds available upfront
- No opportunity to dollar-cost average
- Surrender charges apply to the full amount
- Consider liquidity needs carefully
For Ocala residents receiving a pension buyout, inheriting money, or rolling over workplace retirement accounts, a single premium annuity can efficiently convert that lump sum into secure retirement income.
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