Maybe you have contributed the maximum allowable to your 401(k), 403(b), IRA or other tax-qualified retirement plan. Or, perhaps you are in need of an additional way to save for retirement. A tax-deferred annuity can be a great way to put away additional dollars to supplement your retirement income.

In addition to the tax-deferred growth of earnings, owning a tax-deferred annuity has other advantages. Unlike tax-qualified plans, there is no ceiling on contributions, so you may contribute as much as you like. You can delay distributions and allow your annuity to grow until well into your retirement years because there is no "required beginning date" or IRS mandated required minimum distributions.

When you are ready to start receiving income from your annuity, you have many options on how to receive your money.

Systematic Withdrawals
Most annuity contracts allow you to systematically withdraw dollars from your annuity contract. You are taking money out on an automatic or "as needed" basis. This does not guarantee payments over your lifetime, but it does add some flexibility for you and your beneficiaries.

Annuitization
A feature called "annuitization" allows you to customize a payout that best suits your needs. Under annuitization you are depositing money into a contract with an insurance company. The insurance company then guarantees you payments in return. You may choose to receive the payments for a predetermined number of years or for your lifetime or the lifetime of you and another individual.

Here's a breakdown of some of your income plan options:

• A "period certain", sometimes referred to as "specified period" or "term certain" guarantees payments for a specified number of years. You typically have the option of choosing a period certain of 2 to 30 years. If you die before the end of the period, your named beneficiary or beneficiaries will receive payments for the remainder of the guaranteed period.
  
  
• A "single life" plan guarantees payments as long as you are alive, even if you live well beyond age 100. This means you will receive payments even if you live so long that the payments you have received over time actually exceed the amount paid into the annuity. Payments will end upon your death. This is generally the best option to receive both maximum benefits and a guaranteed lifetime income. This may be your preference if you need more income or if you do have beneficiaries.
  
  
• A "single life with a period certain" guarantees payments as long as you are alive, but if your death occurs before the end of a "period certain", the insurance company will continue payments to your beneficiary for the remaining period certain. The period certain can be up to 20 years and must be added at the time of issue of the contract. For example, under a Single Life with a 10-year period certain, if you would pass away in the fifth year, the remaining five years of payments would continue to your beneficiary.
  
  
• A "joint life" plan guarantees payments will be made to you and/or joint annuitant as long as either one is alive. This income plan basically works the same as the single life except the payment is based on two lives as opposed to one. A joint life with period certain is also available.

How much you will receive from one of the income plans depends on your age, income plan selected and dollar amount deposited into the contract. Generally, the older you are, the shorter your life expectancy, thus your payments will be higher. Your financial or tax professional can help you determine which choice is best for your circumstances.