If you participate in a retirement plan where you work, you may find that your employer includes a fixed or variable annuity, or both, in the menu of plan choices. When annuity contracts are offered through a qualified plan they are considered qualified annuities. In this case, qualified means subject to the federal rules that govern how the plans are operated. Money you contribute to a qualified annuity reduces your current taxable salary in addition to accumulating tax-deferred earnings. But
you must begin taking required withdrawals
no later than 701⁄2 and take at least the required minimum each year. Alternatively—or in addition—you can buy an annuity that’s not offered through a qualified plan. In this case, the contract is a nonqualified annuity. Among the key differences are that you pay the premiums with after-tax dollars, you can contribute more than the federal limit for qualified plans, and you can postpone taking income until much later in your life if you wish. Annuities are insurance company contracts. The premiums you pay and tax-deferred earnings on those premiums are designed to be a source of retirement income, either in the future if you choose a deferred annuity or right away with an immediate annuity.   Read more…