Non Qualified Annuity | Ed Slott and Company, LLC

Non Qualified Annuity

Not an IRA question but if someone has a non qualified annuity and annuitize it prior to age 59.5 would the portion of each payment that arrives prior to age 59.5 represent a gain be coded as a premature distribution. And would that be the case whether the person did a life annuitization, or a 20 year period certain annuitization.

Non qualified annuity distributions receive a penalty waiver in Sec 72q as long as the annuitization meets the definition of an "immediate annuity". The exception can be claimed using Form 5329, code12 (Other Exceptions).


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