A non-qualified annuity and a non-qualified retirement plan are not the same thing.
The general rule applies to non-qualified retirement plans paid as annuities but it doesn't apply to standard annuities.
Your father's non-qualified annuity is not a non-qualified retirement plan. It just simply an annuity that wasn't also a qualified plan of some sort (such as an IRA.)
After a period of time, or in the case of certain types of annuities, the principal will be fully distributed and then the entire amount becomes taxable.
While your Prudential representative perhaps didn't explain things very well, he is correct. If the distribution was all earnings, then it is fully taxable.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
