Qualified Annuity


DEFINITION of 'Qualified Annuity'

An financial product that accepts and grows funds, and is funded with pre-tax dollars. "Qualified" is a descriptor given by the Internal Revenue Service (IRS) to indicate that the qualified annuity may be eligible for tax deduction. When a distribution is made, it is subject to income tax.


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BREAKING DOWN 'Qualified Annuity'

A qualified annuity differs from a non-qualified annuity, which is an annuity funded with after-tax dollars. While distributions from a qualified annuity are taxed as income, distributions from a non-qualified annuity are not subject to income tax in their entirety. Qualified annuities are often set up by employers on behalf of their employees as part of a retirement plan.

  1. Annuity

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  2. Income Tax

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  3. Qualified Retirement Plan

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  4. Pension Plan

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  5. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
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    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
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  1. How liquid are variable annuities?

    Variable deferred annuities and variable immediate annuities are not considered liquid. Variable deferred annuities carry ... Read Full Answer >>
  2. Do variable annuities have RMDs?

    Variable annuities are not subject to required minimum distributions (RMDs) unless they are held in qualified plans, such ... Read Full Answer >>
  3. Can variable annuities be rolled into an IRA?

    Variable annuities are often found in government or nonprofit employer retirement plans such as 403(b) or 457(b) plans. With ... Read Full Answer >>
  4. How do I calculate the future value of an annuity?

    When planning for retirement, it is important to have a good idea of how much income you can rely on each year. There are ... Read Full Answer >>
  5. Are variable annuities protected from creditors?

    Whether your variable annuity is protected from creditors depends on the state in which you live. About three-quarters of ... Read Full Answer >>
  6. Are variable annuities tax deferred?

    Variable annuities are tax-deferred. This means an investor does not pay taxes on the interest income from his annuity until ... Read Full Answer >>

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