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Tag Archive: how do annuities get taxed

How Is My Annuity Taxed?

Richard Ericson

How annuities are taxed can be dependent on the types of funds you use to invest in the annuity. When you invest with qualified funds, withdrawals are taxed as ordinary income. When you invest in an annuity contract with non-qualified funds, withdrawals are taxed as ordinary income until you get to the principal, which has already been taxed. When you use tax-free or Roth investments to fund your annuity contract, withdrawals maintain their tax-free status. Qualified – The first and most common option is utilizing...

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