If you receive annuity payments from a nonqualified retirement plan, you must use General Rule. Under the General Rule, you figure out the taxable and tax-free parts of your annuity payments using life expectancy tables that the IRS issues.
It needs to be a nonqualified plan. If unsure please inquire with your plan administrator if the following applies::
- Who must use the General Rule. Use this publication below if you receive pension or annuity payments from a nonqualified plan (for example, a private annuity, a purchased commercial annuity, or a nonqualified employee plan); or
- Your annuity starting date is before November 19, 1996 (and after July 1, 1986), and you don't qualify to
A qualified plan if:
- Your annuity starting date is before November 19, 1996 (and after July 1, 1986), and you don't qualify to use, or didn't choose to use, the Simplified Method; or
- Your annuity starting date is after November 18, 1996, and as of that date, you are age 75 or over, and the annuity payments are guaranteed for at least 5 years.
Review IRS Publication below for additional information.
General Rule and Simplified Method
Qualified plans include:
- 401(k)s
- 403(b)s (also known as tax-sheltered annuity plans)
- 457 plans for government employees
- Traditional IRAs
- Roth IRAs
- SEP and SIMPLE plans for employees of small businesses
- Pension plans
- Profit-sharing plans
- Stock bonus plans
Non-qualified plans include:
- Life insurance policies (if the distribution is full payment)
- Private or purchased commercial annuities
- Military retirement plans
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