What are Qualified Annuities?

Answer:
Annuities come in many forms and are classified

several different ways. For tax purposes, the classifications are either qualified or non-qualified.

Qualified annuities are a type of annuity that are purchased for funding a qualified retirement account such as an IRA, 401K, 403(b) tax deferred annuity, or other retirement plan.

If the requirements are met, qualified contributions may be tax deductible, or partially tax deductible, from the income of the individual or employer who contributes to the account.

Qualified annuities like qualified retirement accounts have contribution limits and usually require withdrawals at age 70 ½.

Like the qualified retirement accounts such as 401Ks, contributions to a qualified annuity reduce your taxable income and the investments grow tax deferred. The main difference between qualified and non-qualified annuities is how you purchase them.

If the annuity is offered as one of your qualified retirement investment options, it’s a qualified annuity. If you purchase an annuity on your own outside of the qualified retirement plan, it’s a non-qualified annuity.

Some qualified annuities offer other features that can include fixed interest rates and death benefits.


	more Q&A sessions like this
	What are Retirement Annuities? What is a Rollover? What is a Traditional IRA? What is an Education IRA? Are there risks with a 401k? What is a Qualified Retirement Plan? What is a Profit Sharing Plan? What is a Roth IRA? What is an IRA? What is a 401K? What is a Tax Shelter?