#118 - How Are Annuities Taxed? A Simple Guide for Retirement
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Retirement tax planning can feel confusing, especially when annuities enter the conversation.
I've found that many people aren't really asking about the annuity itself. They're trying to understand what happens to their money, how it's taxed, and whether an annuity is the right fit for their retirement.
In this episode, I continue our annuity series by walking through the tax rules that often create the most confusion. I explain why the source of your money matters, how qualified and non-qualified annuities are taxed differently, and why buying an annuity inside an IRA doesn't change the tax treatment of that retirement account.
We also discuss how withdrawals work, how tax deferral fits into retirement planning, and why every annuity decision should begin with one simple question: What do I want this money to do for me?
EPISODE SUMMARY
- Understanding how the source of your money determines the way an annuity is generally taxed
- Why placing an annuity inside an IRA usually doesn't change the retirement account's tax rules
- The difference between qualified and non-qualified annuities when withdrawals begin
- How tax deferral allows earnings to continue growing until money is withdrawn
- Asking what role an annuity should play before deciding whether it belongs in your retirement plan
- And more!
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EPISODE LINKS & RESOURCES
Does an Annuity Fit Within My Financial Plan?
Related Episodes
- #115 - Understanding Annuities Before You Decide if They Belong in Your Retirement Plan
- #116 - Which Type of Annuity Fits Your Retirement Plan?
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Annuities are insurance products issued by insurance companies and involve costs, fees, limitations, and contractual terms that vary by product. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Before purchasing an annuity, investors should carefully consider their financial objectives, risks, charges, expenses, and contract features, and consult with their financial, tax, and legal professionals.