Annuities offer tax-deferred growth, but taxes are eventually owed on withdrawals. Taxes on annuities are based on whether they are qualified or non-qualified funds.
But what is the difference between a qualified and a non-qualified annuity? And if you aren’t a spouse and inherit an annuity, what are the tax ramifications?
Qualified vs. Non-Qualified Annuities
A qualified annuity is a retirement savings account that is funded with pretax dollars. For example, the funds you contribute to a 401(k) plan or individual retirement account (IRA) are considered qualified annuities.
Anne Johnson
Author
Anne Johnson was a commercial property and casualty insurance agent for nine years. She was also licensed in health and life insurance. She went on to own an advertising agency, where she worked with businesses. She has been writing about personal finance for 10 years.
