Choose the correct explanation for why annuities are a type of tax$-$sheltered investment and what you have to give up to obtain this tax$-$favored treatment.

Tax on the earnings is deferred until they are paid out. But there is an early withdrawal penalty if you receive distributions before you turn $59\mathrm{.}5.$

Tax on the earnings is deferred until they are paid out. But there is an early withdrawal penalty if you receive distributions before your full retirement age $($currently $67).$

Distributions are taxable only if you withdraw money from an annuity before you turn $59\mathrm{.}5,$ and are tax$-$free for those over age $59\mathrm{.}5.$

Distributions are taxable only if you withdraw money from an annuity before your full retirement age $($currently $67),$ and are tax$-$free for those over that age.