What Happens when an Annuity Matures

Since a CD matures, people think that an annuity also matures and they ask what happens when an annuity matures. While a CD matures and has a maturity date and value, an annuity does not mature and has no maturity date or value. Different terms and concepts are uses when an annuity is concerned.

Discussion of what happens when an annuity matures

An annuity does not mature as a certificate of deposit or an option would. The annuity contract remains in force until annuitization by the annuitant. That means at some point in the future, the annuitant will begin to take income from the annuity account. This phase of the annuity contract is known as annuitization. At annuitization, the annuitant can withdraw all the funds in the annuity contract or begin receiving annuity payments based on the income option best suited to his or her lifestyle.

There are exceptions to the withdrawal rules from the annuity account such as for annuities funding certain tax-qualified plans, minimum distributions must begin at age 70½.