During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal


A) Both interest and principal are taxed; no other penalties are imposed.

B) Neither interest nor principal is taxed, but penalties may be imposed.

C) Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½.

D) Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½



Answer: Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½

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