Whats the tax on payouts from a qualified plan or IRA annuity?
A. 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. • Any non-deductible or after-tax amount you put into the plan is not subject to income tax when withdrawn, and • The earnings on your investment are not taxed until withdrawal. If you withdraw money before the age of 59-1/2, you may have to pay a 10% penalty on the amount withdrawn in addition to the regular income tax. One of the exceptions to the 10% penalty is for taking the annuity out in equal periodic payments over the rest of your life. Once you reach age 70-1/2, you will have to start taking withdrawals in certain minimum amounts specified by the tax law (with exceptions for Roth IRAs and for employees still working after age 70-1/2).
A. 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. • Any nondeductible or after-tax amount you put into the plan is not subject to income tax when withdrawn, and • The earnings on your investment are not taxed until withdrawal. If you withdraw money before the age of 59-1/2, you may have to pay a 10% penalty on the amount withdrawn in addition to the regular income tax. One of the exceptions to the 10% penalty is for taking the annuity out in equal periodic payments over the rest of your life. Once you reach age 70-1/2, you will have to start taking withdrawals in certain minimum amounts specified by the tax law (with exceptions for Roth IRAs and for employees still working after age 70-1/2).
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. • Any nondeductible or after-tax amount you put into the plan is not subject to income tax when withdrawn • The earnings on your investment are not taxed until withdrawal. If you withdraw money before the age of 59-1/2, you may have to pay a 10% penalty on the amount withdrawn in addition to the regular income tax. One of the exceptions to the 10% penalty is for taking the annuity out in equal periodic payments over the rest of your life. Once you reach age 70-1/2, you will have to start taking withdrawals in certain minimum amounts specified by the tax law (with exceptions for Roth IRAs and for employees still working after age 70-1/2).
