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Qualified vs. Non-Qualified Annuities

Presenter : All Things Annuity

Category : General Annuity Info

Topic : Qualified vs. Non-Qualified Annuities

Length : 4 Mins

Article : Qualified vs Non-Qualified

Tags : Qualified Annuities, taxes, annuity,

About this Video

This video explains the differences between qualified and non-qualified annuities. The term qualified does not pertain to any particular type of annuity, but rather the tax designation of the funds used to purchase the annuity.


Qualified vs. Non-Qualified Annuity Overview

Qualified Funds are moneys eligible to be placed in tax deferred wealth accumulation vehicle that is approved by the IRS. It is important to note that the money placed in one of these accounts must be earned income. One of the major benefits of annuities is that the money that qualified money that is placed in an annuity is often subject to lower tax liability due to the fact that that it is tax deductible. The distribution of income and the taxes paid are deferred until a later point in time, most often after the owner of the annuity has retired.

If money is non-qualified, that means it is not part of a tax-deferred account. Examples of tax deferred account are traditional or Roth individual retirement account (IRA), a simplified employee pension (SEP) or an employer sponsored defined benefit plan such as a 401(k). Taxes have already been paid on non-qualified money.

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