How Are Annuities Taxed? A Simple Guide for Retirement (Ep. 118 | Pt. 3)

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?

Key takeaways:

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How tax deferral allows earnings to continue growing until money is withdrawn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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