A non-qualified annuity is funded with after-tax money, meaning that the funds used to purchase the annuity have already been taxed. Unlike qualified annuities, which are typically purchased with pre-tax dollars from retirement accounts like 401(k)s or IRAs, non-qualified annuities are funded with money already subject to income tax. Non-qualified annuities are often used to supplement retirement savings, especially for individuals who have maximized their contributions to qualified retirement accounts or those looking for additional tax-deferred growth options outside traditional retirement plans.