gif (1280 bytes) Q. How will my annuity payouts be taxed?
A. The way your payouts are taxed is different for qualified and non-qualified plans. Here is a summary of the two different types of plans. Qualified And Non-Qualified Annuities A tax-qualified annuity is one used to fund a qualified retirement plan, such as an IRA, Keogh plan, 401(k) plan, SEP (simplified employee pension), or some other retirement plan. The tax-qualified annuity, when used as a retirement savings vehicle, is entitled to all of the tax benefits and penalties that Congress saw fit to attach to such plans. The tax benefits are: • The amount you put into the plan is not subject to income tax, and/or • The earnings on your investment are not taxed until withdrawal. The tax rules say that you cannot make withdrawals before age 59-1/2 without paying an additional tax of 10% of the amount withdrawn. Further, you must begin taking withdrawals in certain minimum amounts once you reach the age of 70-1/2. A non-qualified annuity, on the other hand, is purchased with after-tax d
