Your annuity start date depends on which kind of contract you own. An immediate annuity begins paying within one to twelve months of purchase. A deferred annuity pays out whenever you decide to convert the accumulated value into income, with the earliest practical date shaped by surrender charges and the latest set by the contract’s maturity age, typically around 95. That moment of conversion is called the annuitization date, and once you cross it, the contract generally cannot be reversed back into a lump sum.
Immediate Annuities Start Within Twelve Months
A single premium immediate annuity (SPIA) is the fastest path from purchase to income. You pay a lump sum, and the insurer begins sending checks. The first payment typically arrives within one month of the purchase date and must start no later than twelve months out. There is no accumulation phase, no compounding period, and no surrender window to wait through.
SPIAs suit retirees who already have a lump sum ready to convert into guaranteed income. Someone rolling over a 401(k) balance might buy a SPIA specifically to have income arriving next month rather than years from now. The trade is direct: you give up access to the principal in exchange for a payment stream the insurer guarantees for as long as the contract specifies.
Deferred Annuities Let You Choose the Date
Deferred annuities work on the opposite timeline. You buy the contract, contribute over months or years, and let the balance grow tax-deferred until you decide to start income. That could be five years out or thirty. The contract sits in its accumulation phase the entire time, compounding without triggering a taxable event.
You control the annuitization date. Most owners pick a moment when their retirement timeline, tax situation, and income needs line up. Delaying the start date means more time for tax-deferred growth, which generally translates to larger payments once income begins. The insurer also factors in your age at annuitization: the older you are when payments start, the higher each individual payment tends to be, since the insurer expects to make fewer of them.
Partial withdrawals before annuitization are usually allowed, but they chip away at the contract value and may trigger surrender charges or tax penalties. A withdrawal is not the same thing as annuitizing. Annuitization is a one-way conversion of the remaining value into a guaranteed payment stream.
The Earliest Practical Start Date: Surrender Charges
Most deferred annuities impose surrender charges during the early years of the contract. If you withdraw funds or annuitize before the surrender period expires, the insurer keeps a percentage of the amount as a fee. Surrender periods commonly run three to ten years, with six to eight years being the most typical range. The charge usually starts high and declines each year until it disappears.
Most states also give buyers a free-look period of 10 to 30 days after purchase, during which you can cancel the contract entirely for a full refund. That window closes quickly, and after it, the surrender schedule governs any early exit.
The Latest Start Date: Maturity Age
Every annuity contract includes a maturity date that forces annuitization by a certain age. This deadline is typically around age 95. If you haven’t elected to annuitize by then, the contract automatically converts to payout status. The purpose is to prevent the annuity from functioning as a permanent tax-deferred savings account rather than an income vehicle. The payout rate used at forced annuitization is calculated at that time, not at the time of the original purchase, which means you have less control over the terms than if you’d chosen the date yourself.
Between the end of the surrender period and the maturity deadline, you have a wide window to pick a start date that fits your plan.
QLACs Push the Start Date as Late as Age 85
A qualified longevity annuity contract (QLAC) is a specialized deferred annuity built to start very late in retirement, functioning as insurance against outliving other savings. You buy a QLAC inside a traditional IRA or employer retirement plan, and its premium no longer counts toward your required minimum distribution (RMD) calculation until payments actually begin.1Internal Revenue Service. Instructions for Form 1098-Q
Payments from a QLAC must begin no later than the first day of the month after you turn 85, though you can choose an earlier date. The contribution limit is $200,000 as of 2025, indexed annually for inflation and rounded down to the nearest $10,000. SECURE 2.0 removed the old rule that also capped contributions at 25% of the account balance, so the dollar limit is now the only constraint.1Internal Revenue Service. Instructions for Form 1098-Q
Here’s how the math plays out. If you have $500,000 in an IRA and move $150,000 into a QLAC at age 70, your RMDs at 73 are calculated on $350,000 rather than the full balance. Lower taxable distributions for a dozen years, with the QLAC kicking in later to cover expenses in your 80s once other accounts may be depleted.
RMDs Can Force the Timing for IRA-Held Annuities
Annuities held inside traditional IRAs and other tax-advantaged retirement accounts are subject to RMD rules, which can push your start date whether you’re ready or not. You generally must start taking distributions by April 1 of the year after you turn 73. For people born in 1960 or later, that age rises to 75.2Congressional Research Service. Required Minimum Distribution (RMD) Rules for Original Owners
If you own a deferred annuity inside an IRA and haven’t annuitized by the time RMDs kick in, the contract’s value still counts toward your RMD calculation. You have to satisfy the requirement either by taking withdrawals from the annuity or by pulling from other IRA accounts. Annuitizing converts the value into periodic payments, and those payments can satisfy the RMD for that account as long as the annual amount meets or exceeds the required minimum.3Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
Missing an RMD is expensive. The penalty is a 25% excise tax on the amount you should have withdrawn but didn’t. If you catch the mistake and correct it within two years, the penalty drops to 10%.4Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs For annuity owners, that means checking whether the payment schedule actually delivers enough each year to clear the RMD hurdle.
What You Lock In on the Start Date
The annuitization date is not only about when payments start. It’s also when you lock in how they’re structured. The choice you make at annuitization cannot be changed afterward.
- Life only pays for as long as you live and then stops. Because the insurer has no obligation beyond your lifetime, this option produces the highest monthly payment.
- Joint and survivor continues for your lifetime and then continues for a second person, usually a spouse, at 50%, 75%, or 100% of the original amount. Each payment is lower than life-only.
- Life with period certain pays for your lifetime, but if you die before a guaranteed period ends (commonly 10 or 20 years), your beneficiary receives the remaining payments through that period.
- Period certain only pays for a fixed number of years regardless of whether you’re alive. If you outlive the period, income stops.
Some contracts also offer refund options. A cash refund annuity returns any unrecovered premium to beneficiaries as a lump sum if you die early. An installment refund pays the difference in continued installments. Both tend to produce slightly lower monthly income than a life-only structure.
If the Owner Dies Before Payments Start
When the owner dies during the accumulation phase, the death benefit passes to the named beneficiaries, and how quickly they must take it depends on their relationship to the deceased.
For non-qualified annuities, federal tax law requires the entire interest to be distributed within five years of the owner’s death. A designated beneficiary can instead stretch payments over their own life expectancy, provided distributions begin within one year of the death. A surviving spouse can step into the owner’s shoes, assume the contract, and continue the tax-deferred accumulation as if nothing had happened.5Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
For annuities inside IRAs and other qualified plans, the SECURE Act’s 10-year rule applies to most non-spouse beneficiaries. The entire account must be emptied by the end of the tenth year following the year of death.6Internal Revenue Service. Retirement Topics – Beneficiary Eligible designated beneficiaries, including surviving spouses, minor children, disabled individuals, and beneficiaries not more than 10 years younger than the deceased, may still use the older life-expectancy method.