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Simple English definitions for legal terms
SPDA
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A quick definition of SPDA:
An annuity is a type of savings account where you put in money and get paid back in regular payments. There are different types of annuities, like ones that pay for a certain number of years or ones that pay for your whole life. Some annuities start paying right away, while others start paying later. An SPDA is a type of annuity where you pay a lump sum of money and get paid back at a later date. The money you earn on the investment is not taxed until you take it out.A more thorough explanation:
SPDA stands for single-premium deferred annuity. An annuity is an obligation to pay a stated sum, usually monthly or annually, to a stated recipient. SPDA is a type of annuity where a party pays a lump-sum premium in exchange for receiving a specified sum at a future date. The income earned on the investment is tax-free until it is withdrawn.
For example, John purchases an SPDA by paying a lump sum of $100,000 to an insurance company. The insurance company promises to pay John a specified sum at a future date, say 10 years from now. The income earned on the $100,000 investment is tax-free until John withdraws it.
SPDA is a savings account with an insurance company or investment company, usually established for retirement income. Payments into the account accumulate tax-free, and the account is taxed only when the annuitant withdraws money in retirement.