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What is the taxation RATE on a NON Qualified annuity purchased after 1982 when a withdrawal is made during the accumulation period and NOT during annuitization. I already understand that if the annuity is newer than 1982 , LIFO would apply in that the interest would be drawn out first. Let's also assume that the individual is older than 59 and a1/2 so we don't have a 10% penalty on the interest to cloudy this issue. That is not my question. My to the point question is basically- Would the distribution be taxed at the individual's income tax rate or be limited to the 15% Capital gains tax rate maximum? Does the Capital Gains tax rate apply to annuities?

Submitted: 45 days and 8 hours ago.

Category: Tax

Value: $15

Status: CLOSED

State/Country relating to question: Pennsylvania

Accepted Answer

Withdrawals of earnings from a nonqualified annuity contract are taxed at an individual's ordinary income tax rate. The distributions are reported on Form 1099-R and reported on line 16 of Form 1040 (if that is the form that is being filed).

See page 5 - http://www.irs.gov/pub/irs-pdf/p575.pdf

Accepts:
Expert:	Bill
Pos. Feedback:	99.6 %
Answered:	10/9/2009

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State/Country relating to question: Pennsylvania

Accepted Answer

Withdrawals of earnings from a nonqualified annuity contract are taxed at an individual's ordinary income tax rate. The distributions are reported on Form 1099-R and reported on line 16 of Form 1040 (if that is the form that is being filed).

See page 5 - http://www.irs.gov/pub/irs-pdf/p575.pdf

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Optional Information

State/Country relating to question: Pennsylvania

Accepted Answer

Withdrawals of earnings from a nonqualified annuity contract are taxed at an individual's ordinary income tax rate. The distributions are reported on Form 1099-R and reported on line 16 of Form 1040 (if that is the form that is being filed). See page 5 - http://www.irs.gov/pub/irs-pdf/p575.pdf

Related Tax Questions

Withdrawals of earnings from a nonqualified annuity contract are taxed at an individual's ordinary income tax rate. The distributions are reported on Form 1099-R and reported on line 16 of Form 1040 (if that is the form that is being filed).

See page 5 - http://www.irs.gov/pub/irs-pdf/p575.pdf