Qualifying Annuity

Definition of 'Qualifying Annuity'


This type of annuity is similar to any other, except that it has been approved by the IRS for use within a Qualfied Retirement Plan or IRA. Qualifying Annuties can be either fixed, indexed or variable, depending upon the investment objectives of the plan sponsor. Contributions made into a Qualifying Annuity are tax-deductible according to ERISA guidelines, unless the plan or annuity has a Roth feature.

Investopedia explains 'Qualifying Annuity'


Qualifying Annuities are not tax-deductible plans in and of themselves; they must reside within a Qualified Plan or IRA in order to enjoy this status. Qualifying Annuities can be either the sole vehicle inside the plan or account, or they can be one of several other choices that are offered as well. In many cases, the Qualifying Annuity is a variable contract and is the only vehicle offered within the plan, with the variable subaccounts constituting the choices available to plan participants.



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