What is the accumulation phase of an annuity contract?
This refers to the period in which you make premium or purchase payments to the contract. These payments grow on a tax-deferred basis until withdrawn. Withdrawals of taxable amounts are subject to income tax and, prior to age 59½, the IRS may impose a 10% penalty. A surrender charge may be imposed by the insurance company if a withdrawal is made in excess of the free withdrawal amount during the early years of the contract.
