What Are Qualified And Nonqualified Annuities? 
A qualified annuity will have the tax characteristics of the particular type of plan it is -LRB- IRA , Roth IRA etc. -RRB- . A non qualified annuity has it 's own tax characteristics . Many of those characteristics are similar to qualified plans , but there are some that are unique to non qualified annuities . - There is no maximum annual contribution . You can invest as much as you would like into a non qualified annuity - Unlike in a qualified plan , the IRS does not force you to start taking withdrawals at age 59 1/2 or at any age - If you annuitize , your tax burden will be spread out over the withdrawal period . Instead of being taxed as earnings first , each payment will be taxed as being made up of both some earnings and some return of basis . This tax exclusion ratio is calculated at the time you annuitize . 