Are annuity distributions the same as installment distributions?

Annuity distributions and installment distributions are distinct concepts in retirement plan distributions, which is why the answer is correct.

Annuity distributions typically involve a series of payments made to a participant from their retirement account over a specified period, often for the lifetime of the participant or a set number of years. These payments can be structured in various ways, such as fixed, variable, or indexed annuities, depending on the terms of the annuity contract. The main characteristic is that they tend to provide a predictable income stream until a specified event occurs, like death or a pre-established end date.

On the other hand, installment distributions refer to withdrawals from a retirement account that are made in regular, periodic payments over time but are not necessarily tied to an annuity contract. Instead, these distributions could be based on the participant’s choice or the plan's rules regarding how much and how often money is withdrawn. Installment distributions can vary in amount and duration, depending on the participant's withdrawal strategy rather than a defined payout structure.

Thus, while both involve receiving distributions over time, the foundational principles, structures, and rules governing them are different, confirming that they are not the same.