Final answer:
A retiree reaching retirement age may choose between accepting an annuity payment or receiving a lump-sum distribution. An annuity provides a regular income stream for life, while a lump-sum distribution gives the retiree a one-time payment of the entire account balance. The choice depends on the retiree's financial goals and ability to manage the funds. Correct option is B.
Step-by-step explanation:
When reaching retirement age, a retiree may generally choose to accept an annuity payment based on the value of the account balance or receive a lump-sum distribution. An annuity is a fixed sum of money paid every year, bought either in a lump sum or over time. An annuity provides a regular income stream for life, but the payments do not increase over time. On the other hand, a lump-sum distribution gives the retiree a one-time payment of the entire account balance, which they can use as they see fit. This option allows the retiree to invest or manage the funds themselves but may require careful financial planning to ensure the money lasts throughout retirement.