A Single Premium Deferred Annuity (SPDA) is a type of annuity where you make one lump-sum payment to an insurance company, and the money grows tax-deferred until you start receiving income payments, typically at retirement. It's a way to convert a large sum of money into a stream of income later in life, while also enjoying tax advantages during the accumulation phase.

Here's a more detailed breakdown:

Key Features:

Single Premium: You fund the annuity with one upfront payment, unlike flexible premium annuities.

Deferred Payout: Income payments are delayed until a future date, often retirement, allowing your investment to grow tax-deferred.

Tax Deferral: Earnings within the annuity grow tax-deferred until you begin receiving payments.

Guaranteed Income (potentially): Many SPDAs offer a guaranteed minimum interest rate and a death benefit, providing some security.

Fixed or Variable: SPDAs can be fixed (with a guaranteed interest rate) or variable (where returns are tied to investment performance).

Long-Term Savings: SPDAs are generally suitable for those with a lump sum to invest and who don't need immediate access to the funds.

A flexible premium deferred annuity (FPDA) is a type of annuity that allows you to make periodic premium payments over time, rather than a single lump sum, and defers receiving income payments until a later date. It's a way to save for retirement and allows for tax-deferred growth.

Key Features:

Flexible Premiums: You can contribute to the annuity with multiple premium payments, either on a regular schedule or as your finances allow, after an initial payment.

Deferred Income: Income payments from the annuity are delayed until a future date, allowing your investment to grow tax-deferred.

Tax-Deferred Growth: Earnings within the annuity grow tax-deferred until you start receiving income payments.

Potential for Guaranteed Income: Some FPDAs offer a guaranteed minimum interest rate and/or the option to convert the accumulated value into a stream of lifetime income.

A Multi-Year Guaranteed Annuity (MYGA) is a type of fixed annuity that provides a guaranteed interest rate for a predetermined number of years.

Key Features:

Fixed Interest Rate: The interest rate is locked in for the entire term of the contract, typically ranging from three to 10 years.

Guaranteed Return: Unlike other investments, MYGAs offer a guaranteed rate of return and protection from market volatility.

Tax-Deferred Growth: You don't pay taxes on the interest earned until you make withdrawals, allowing for tax-deferred growth.

Single Premium Payment: MYGAs are typically funded with a single upfront payment.

Surrender Charges: MYGAs are designed for long-term savings, and withdrawals before the term ends may be subject to surrender charges.

Benefits:

Predictable Growth: Knowing your interest rate is locked in provides predictable savings growth.

Lower Risk: MYGAs are considered a lower-risk investment compared to others that are tied to market performance.

Higher Potential Interest Rates: MYGAs can potentially offer higher interest rates than Certificates of Deposit (CDs).

Retirement Income: MYGAs can be part of a retirement strategy to provide a guaranteed income stream.

Comparison to CDs: MYGAs are often compared to CDs due to their guaranteed interest rates. However, key differences include:

Tax Deferral: MYGA earnings are tax-deferred, while CD interest is typically taxed annually.

Potential for Higher Rates: MYGAs can offer higher interest rates than CDs.

Penalty-Free Withdrawals: MYGAs usually allow for penalty-free withdrawals of a percentage of the account value each year, while CDs may have more restrictive withdrawal rules.