How Do Pension Annuities Work? 
A pension annuity is probably better known as in immediate annuity . This is a contract offered by a life insurance company that provides a lifetime of guaranteed income in exchange for a single deposit . These transactions are usually handled as a roll-over . In such a case the insurance company will coordinate the transfer of funds from the existing accumulation plan -LRB- 401 -LRB- K -RRB- for example , to the annuity . This does not affect taxation , but a CPA is a better source of tax information . 