17. VA Ordinary Income¶

title: Variable Annuities are taxed at ordinary income. description: [AFW S.12.17] Securities Objection #17

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Non-qualified annuities grow tax-deferred, mutual funds don't. Mutual fund investments rarely provide the annual 15% long-term capital gains rates that they claim to provide. On the other hand, variable annuity owners are often taxed at 15% even when their tax bracket is 25% (marginal rate vs gross rate).