C.22 Qualified and Non-Qualified Annuities Flashcards

An annuity purchased with pre-tax dollars, typically within a retirement account like an IRA or 401(k), where taxes are deferred until withdrawal.

An annuity purchased with after-tax dollars, meaning only the earnings portion of withdrawals is subject to taxation.

An annuity that begins making periodic payments to the annuitant immediately after a lump-sum investment.

An annuity that delays income payments until a future date, allowing earnings to grow tax-deferred.

An annuity that provides guaranteed, fixed interest earnings and predictable payments.

An annuity where returns and payments fluctuate based on the performance of underlying investment options, such as mutual funds.

A type of fixed annuity that earns returns based on a stock market index, with a guaranteed minimum return.

The process of converting an annuity’s account value into periodic income payments for a specified period or lifetime.

A fee imposed for withdrawing funds from an annuity before a specified surrender period ends.

The portion of an annuity payment that is considered a return of the investor’s principal and is therefore tax-free.