Qualified Annuity

A qualified annuity is an annuity purchased through a tax advantaged retirement plan--either employer-based or individually owned--such as a 401(k), 403(b), 457 or IRA plan. For example, an annuity purchased through an employer-sponsored 401k or 403b plan would be considered a qualified annuity. An annuity purchased with funds that are in an individual retirement account would also be considered qualified. Pre-tax money can be used to purchase qualified annuities through an employer-sponsored plan.