Annuities
Some or all of the income you receive from an annuity is taxable at ordinary income tax rates.
If you hold the annuity outside of a qualified retirement account, the portion of the payment that represents a return of your investment, known as the exclusion amount, is tax-free. The remainder is taxable. But if you hold the annuity inside a traditional retirement account, 100% of the payouts are taxed at ordinary income tax rates.
