Increases in accrued values of non-qualified annuities are taxed as ordinary income at distribution, whether that distribution is a withdrawal, loan, assignment, annuity payments or death proceeds.
Qualified annuities may allow participants to borrow the lesser of $50,000 or 50 percent of the present value of a participant's accrued interest. Loans must be repaid within five years. The only exception to the five-year rule is a loan made to acquire the principal residence of the participant. Loans have a minimum beginning balance of $1,000. Repayment must be made in level installments, no less than quarterly, over the term of the loan. If two consecutive payments of principal and interest are missed, the loan is considered in "default." The outstanding balance is then includible in the participant's taxable income and a 10 percent premature distribution tax penalty would be imposed.
Ohio National is not affiliated with, nor does it endorse or sponsor, any particular prospecting, marketing or selling system.