Qualified Annuity

What qualifies your annuity (for favorable tax treatment)? Four years of college, two years of graduate school, and a gap year in Vienna?

Nope. The IRS gets to do the qualifying.

Contributions to a qualified annuity happen with pre-tax dollars. That designation means that the amount of money you put into the retirement vehicle become tax-deductible. However, there are rules about achieving the status of "qualified." The IRS designates which annuities count, and sets the parameters of how much of the contribution remains eligible for tax-exempt status.

Meanwhile, non-qualified annuities (the ones that dropped out of school in the eighth grade and survive on the streets by their wits) get funded with after-tax dollars. No tax benefits for them.