During which period of an annuity do premiums earn interest on a tax-deferred basis?

During the accumulation period of an annuity, the premiums that are paid into the annuity earn interest on a tax-deferred basis. This means that the investment growth within the annuity is not taxed as income until withdrawals are made. It's a key feature, as it allows the funds to grow more efficiently over time without the immediate tax implications that would occur if the interest were taxed annually.

This period is critical for individuals who wish to save for retirement or other long-term goals, as it provides an opportunity for their investments to compound without being diminished by taxes. The funds remain invested and continue to earn interest until the owner decides to enter the distribution phase, at which point taxes may be applied on the withdrawn amounts.

In contrast, other periods such as the distribution period and annuitization period focus on the payout and income phase of the annuity, where the tax treatment can be different. The withdrawal period may imply taking money out of the annuity, which could also trigger taxes. Hence, the accumulation period stands out as the phase where tax-deferred growth occurs.