Frequently Used Annuity Terms 

Accumulation Period

The period of time between when the annuity is issued and when the insurance company begins to make income payments to the annuitant. Interest earned or investment results experienced on the accumulated payments during this time are added to the account tax-deferred under current tax laws.

Annuitization

Annuitization involves converting your accumulated retirement assets into a series of periodic payments that last for a period of time of your choosing, in accordance with the provisions of the annuity contract.

Distribution Period

The period of time, either a specified number of years or lifetime, over which distribution payments are made to the annuitant. Earnings become taxable when the annuitant begins to receive payments. The payout during the distribution period can either be fixed or variable.

Premature/Early Withdrawals (Distributions)

Withdrawals are reported as income and are subject to ordinary income tax treatment (as opposed to capital gains or dividend income), and if made prior to age 59½, may be subject to an additional 10% federal income tax penalty.  In addition, company imposed surrender charges may apply to certain withdrawals.

Surrender

Termination of the contract by the owner. Most annuity contracts impose surrender charges during the early years of the contract, and each subsequent contribution may have its own surrender charge period. All accumulated interest will usually be taxable to the owner at time of surrender, and tax penalties (10%) will apply if the owner is not yet 59½ years of age (unless an IRS exception applies).

Systematic Withdrawals

With this payout strategy, you can withdraw money from the accumulated value of your contract on a regular schedule – making it an effective way to supplement income either before or after retirement. Systematic withdrawals are also flexible.

Withdrawal Charges

Most annuities will allow a certain percentage of the account value to be withdrawn free of charge in each of the initial contract years. Beyond this “free corridor,” a withdrawal charge, expressed as a percentage of the amount withdrawn, is assessed for a specified number of years after the issue of a deferred annuity or after the date of a subsequent contribution. The charge typically decreases annually until the year specified in the contract, when it reaches zero, and all future withdrawals are without charge.

1 Be aware that some annuities reserve the right to charge a fee for transfers over a specified limit, such as 12 per year.

2 These features are complex and vary in how they operate, so you should always read the prospectus carefully for the specific variable annuity you are considering before electing a guaranteed minimum income option.
3 Withdrawals and transfers from a fixed maturity option prior to maturity will result in a market value adjustment, which will increase or decrease its value. The guarantees provided by minimum income and death benefits are adjusted by the amounts of any withdrawals.

Life insurance and annuities are issued by AXA Equitable Life Insurance Company (AXA Equitable) and by various unaffiliated carriers through AXA Network, LLC and its subsidiaries. Co-distributed by AXA Distributors, LLC and AXA Advisors, LLC, members FINRA, SIPC. AXA Equitable, AXA Network, AXA Distributors and AXA Advisors are affiliated companies. All guarantees are based on the claims-paying ability of AXA Equitable. The guarantees do not apply to the investment portfolios. 

AXA Financial, Inc. and its subsidiaries do not provide tax or legal advice. This material is provided for informational purposes only. Please consult your tax and/or legal advisors regarding your particular circumstances.

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