The difference is rather simple. Qualified Annuities - funded with pre-tax funds. Non-Qualified Annuities - funded with post-tax funds. More differences: Qualified Annuities: meets ERISA (Employee Retirement Income Security Act) guidelines. includes 401(k) plans. profit sharing plans. 403(b) plans. Keogh (HR-10) plans. Has government protection. Non-Qualified Annuities: Deferred compensation. Split-dollar life insurance. Executive bonus plans (as their high-end needs can't be met with the strict ERISA guidelines).