When you are looking at starting an annuity there are two types of money that can be used. There is qualified, money that you haven’t paid taxes on like a 401k that was funded with pre-tax dollars. When you start taking distributions from an annuity funded with qualified money, you will have to pay takes on the principal and the interest that was earned. With non-qualified money, money that you already paid taxes on like money from a saving or checking account, when you start taking distribution you will only pay taxed on the interest that was earned.
Now there are also two different types of annuities deferred and immediate. A deferred means that there is a waited period before you can start taking distributions or immediate meaning that once that annuity is in affect you can immediately start taking distributions.
So a non qualified immediate annuity means that the money being used to fund it has already been taxed and once the annuity is approved you can immediately start taking an income.
When looking at annuities make sure that you shop around with a broker that represent multiple annuities. You may want to look at some that offer an income bonus and or a life time income.