Single Premium Deferred Annuity The SPDA (Single Premium Deferred Annuity is a tax-deferred investment similar to an IRA (Individual Retirement Account) without many of the IRA restrictions. Here's how it works: An investor makes a lump-sum payment to an insurance company or mutual fund selling the annuity. That lump-sum payment can be invested in either a fixed-return investment like a Certificate of Deposit (CD) or a variable-return instrument, or portfolio that can be spread among stocks, bonds and other investment accounts.   Proceeds are taxed only when distributions are taken. In contrast to an IRA, there is no limit to the amount that may be invested in a SPDA. Like the IRA, there is a tax penalty for withdrawals before 59 1/2.