The distribution phase starts when you stop making contributions and start receiving distributions. Again, this can happen in one lump sum or through regular distributions. Those are the basics. Let's add in even more potentially confusing options. There are quite a few types of annuities, but the main varieties are fixed , variable , immediate and equity-indexed .
Deferred annuities are the most commonly purchased type.
A fixed annuity gives you a guaranteed interest rate during the time you're making contributions. This interest rate can be adjusted every six months or year depending on prevailing rates. A variable annuity allows you to invest your contributions different ways. You can create sub-accounts within the annuity to diversify your options, if you choose. Distribution usually begins one month after transfer.