When you’re looking for the highest annuity payouts we’re usually speaking about a Single Premium Immediate (SPIA) which can provide a fixed income for life or a specified period. It’s just a payout of your own money but if you live long enough to receive more than the original premium put in then you’re beating the odds and you’re not outliving your money. One of the drawbacks though with a SPIA is that you can only defer income payments for 12-months.
There is another type of annuity called a Deferred Income Annuity (DIA) and sometimes referred to as a longevity annuity, which is also a contract between you and the insurance company. You give an insurance company a lump sum in exchange for a guaranteed series of payments in the future. Deferred income annuities work a lot like single premium immediate annuities (SPIA) but unlike a SPIA you can defer payments up to 45 years.
DIA's typically have a much higher payout than SPIA's since you can defer out longer to a higher age and the older you are the higher the payout percentage. There are many different payout options depending on the issuing insurance company. Very few insurance companies offer DIA's in comparison to SPIA’s
When qualified funds are used to fund a longevity annuity then you would be using what’s called a Qualified Longevity Annuity (QLAC) which works a lot like a DIA but is for qualified money like an IRA. Under IRS requirements required minimum distributions (RMDs) are only required when the payments begin. You can defer RMDs to age 85 with a DIA.