An annuity that does not fall under an IRS-approved pension plan. Contributions are made with after-tax dollars, but earnings can accumulate tax-deferred until withdrawal.
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An annuity or pension plan that one buys individually rather than through an employer. Nonqualified plans are not subject to the same restrictions as qualified plans. As a result, withdrawal penalties are smaller or non-existent, and one may continue to make contributions to a more advanced age (sometime until the annuitant is over 80). In the United States, specific restrictions on nonqualified plans are set at the state level. The IRS does not regulate them; as a result, contributions are not tax-deductible, but earnings still are.
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An annuity not approved by the Internal Revenue Service for tax-deferred pension contributions. A nonqualifying annuity permits the investor to defer taxes on income earned by the annuity but not to reduce taxable income for contributions made to the annuity. Compare qualifying annuity.
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