When planning for retirement, understanding all your options is crucial. A non-qualified annuity can be a powerful tool for growing your savings while enjoying tax-deferred growth. But what exactly is a non-qualified annuity, and how does it differ from other retirement products?
In this guide, we’ll explain what non-qualified annuities are, how they work, their tax advantages, and whether they’re a good fit for your retirement strategy.
What is a Non-Qualified Annuity?
A non-qualified annuity is a type of insurance contract funded with after-tax dollars. This differs from a qualified annuity, which is funded with pre-tax dollars typically through retirement accounts like IRAs or 401(k)s. The contributions to a non-qualified annuity don’t reduce your taxable income, but the earnings in the annuity grow tax-deferred, meaning you don’t pay taxes on them until you start making withdrawals.
Non-qualified annuities are often used by people who want to invest additional savings after they’ve maxed out their contributions …