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What is the Difference Between Qualified and Non-Qualified Money?

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Have you been putting money away into an IRA or 401(k) plan? In these qualified retirement account, taxes have not been paid. this is also known as tax deferred. A qualified retirement account means you are putting money aside for retirement, and the government is allowing you to defer the tax payment on that money. When funds are withdrawn, typically during your retirement years, every dollar, principal, and interest, are taxed.

Now let’s look at Non - Qualified money. This is money you have invested after you have already paid the tax on. This is referred to as a cash or non-qualified investment. When interest is earned, only the increase to the investment is taxable. Always speak to a qualified tax professional regarding your individual tax situation.

Americans for Life Financial Services assists clients with understand how retirement planning will affect you during your pre-and post-retirement years. Give our offices a call today.