Chris-Magnussen-22-How are annuities taxed
In this video, Chris Magnussen explains that annuity taxation depends on the funding source—qualified annuities are taxed as ordinary income upon withdrawal, while non-qualified annuities are only taxed on the earnings portion since the initial investment was made with after-tax dollars.
Video Transcript
One question that comes up often when working with people is how would that annuity be taxed? And the simple answer is it depends on the type of funding. If it is from a qualified account, it would be taxed as it would if you're taking it from a brokerage account. It would be considered income in the year that it's taken. If you're working with a non qualified annuity, in that instance, you've already paid taxes on a bulk of that investment, so the only taxes due are on what is seen as actually the profit.
