Annuity glossary
Qualified vs. Non-Qualified Annuity
A qualified annuity is bought with pre-tax retirement money, such as IRA or 401(k) funds, so every dollar withdrawn is taxable and required minimum distribution rules apply. A non-qualified annuity is bought with after-tax dollars: only the earnings are taxed on withdrawal, there is no IRS contribution limit, and lifetime distributions are generally not forced. Tax treatment depends on current law and the contract's facts, so individual guidance may be appropriate.
Any guarantee is backed by the claims-paying ability of the issuing insurer.
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