qualifying annuity

Qualifying annuity

Qualifying Annuity

An annuity that one buys along with one's employer. That is, the annuitant and his/her employer both make tax-deferred contributions to the plan for a certain period, with withdrawals coming upon retirement. If the annuitant begins withdrawals before a certain age, withdrawal penalties apply. One may continue to make contributions until a certain age, usually around 65.

qualifying annuity

An annuity approved by the Internal Revenue Service in which the contributions may be deducted from taxable income. The effect of contributing to a qualifying annuity is deferred taxes on the contributions from the time the contributions are made to the time any withdrawals are made. Qualifying annuities are used for individual retirement accounts, Keogh plans, and profit-sharing plans. Compare nonqualifying annuity.
References in periodicals archive ?
Third, the benefit must be in the form of a "qualifying annuity." The term "qualifying annuity" means an annuity contract or other arrangement providing for a series of substantially equal periodic payments to be made to a beneficiary for the beneficiary's life or over a period ending at least 36 months after the decedent's death.
Thus, by analogy, the IRS has concluded that income received under a life insurance or qualifying annuity contract is U.S.-source income when the issuer is a U.S.