Qualified and Non-Qualified Annuities

Free CFP Exam lesson in Risk Management and Insurance Planning. 14 min read, ~2,125 words.

Non-qualified partial withdrawals = LIFO (earnings first, fully taxable until all gain is withdrawn); 10% penalty on taxable portion if under 59-1/2 (exceptions: death, disability, SEPPs). Non-qualified annuitization = exclusion ratio (investment in contract / expected return = tax-free fraction). Qualified annuities (IRA/401(k)) have no basis. 100% taxable. 1035 exchange...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Key Takeaways
• Exam Shortcuts

Learning objectives

• C.22

Browse all free CFP lessons or jump into free CFP practice questions.