Life · Chapter 9 · Uses & Suitability
Qualified vs Non-Qualified Annuity
Definition
Qualified: purchased inside a tax-qualified retirement plan — contributions are tax-deductible (or pre-tax via salary reduction). Non-qualified: bought with after-tax dollars, no deduction. EITHER WAY, the interest grows tax-deferred.
Exam tip
Tax deferral of growth belongs to ALL annuities. Only the deductibility of contributions depends on qualified status.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms