The annuitization phase involves liquidating the annuity through fixed annuity payments for a period certain or for the remainder of the annuitant’s life. Rolling over annuity funds or receiving a full lump sum from an annuity at maturity is not annuitization. For annuitization to occur, liquidation must occur solely via conversion to an income stream.The period during which an annuitant receives annuity payments from an annuity or other financial product.This period is after the accumulation phase where money is invested into the annuity.
For retirement plan purposes, distributions from defined benefit pension plans, money purchase pension plans and target benefit plans are usually paid in the form of an annuity. For these plans, the annuitization phase is during the participant’s retirement, where benefits are ( usually) paid in the form of an annuityThe period when the annuitant starts to receive payments from the annuity.
When one retires they often rely on their savings as a source of income, after retirement annuities are rolled over from the accumulation phase to the annuitization phase, providing income for retirees. The more that was originally invested into the annuity, the more that will be received when the annuity is paid out.