Which phase comes after the accumulation phase in an annuity?

The phase that follows the accumulation phase in an annuity is the distribution phase. During the accumulation phase, the annuity holder makes contributions and allows the investment to grow on a tax-deferred basis. This phase primarily focuses on saving and building the annuity value.

Once the accumulation phase is complete, the holder transitions into the distribution phase, where they begin to withdraw funds from the annuity, either in a lump sum or through regular payments. This phase is critical as it determines how the accumulated funds will be accessed and utilized, whether for retirement income or other financial needs.

Options that mention "withdrawal phase," "growth phase," or "investment phase" do not capture the formal terminology typically used within the annuity structure, as they may refer to elements of the process but are not the standardized term for the phase following accumulation. Therefore, the distribution phase accurately reflects the intended terminology and concept in relation to the progression of an annuity.