do you pay taxes on a deferred annuity 
owners of these insurance contracts pay taxes only when they make withdrawals take a lump sum or begin receiving income from the account at that point the money they receive is taxed at their ordinary income tax rate 2the bottom lineinvestors often use deferred annuities to supplement their other retirement income such as social security they are part of a mix of assets that can sustain you in retirement however due to their high fees and relative illiquidity they aren t the right choice in every scenario 