What is an After-Tax Retirement Annuity (ATRA)?

Shawn Plummer

CEO, The Annuity Expert

Also Known as Nonqualified Annuity

An After-Tax Retirement Annuity (ATRA), also known as a nonqualified annuity, is a type of annuity funded with after-tax dollars. This means the money you invest in this annuity has already been taxed.

How Does It Work?

  1. Investment Phase: You invest after-tax money into the annuity.
  2. Tax-Deferred Growth: The money in the annuity grows tax-deferred. You don’t pay taxes on the earnings until you withdraw them.
  3. Withdrawal Phase: Upon withdrawal, you only pay taxes on the earnings, not the principal (since the principal was already taxed).

Benefits of ATRA

  • Tax Deferral: Allows your investment to grow without immediate tax implications.
  • Flexibility: No annual contribution limits, unlike some retirement accounts.
  • Estate Planning: Can be passed to beneficiaries, potentially avoiding probate.


  • Penalties: Early withdrawals (before age 59½) may incur a 10% penalty.
  • Fees: Annuities often have higher fees compared to other investment products.


Suppose you invest $20,000 in an ATRA. Over time, it grows to $30,000. When you withdraw, you’ll only pay taxes on the $10,000 gain, not the $20,000 principal.

ATRA Features

FundingAfter-tax dollars
Tax on EarningsDeferred until withdrawal
Contribution LimitsNone
Withdrawal Penalties10% penalty if before age 59½
Estate PlanningBeneficiaries can inherit


An After-Tax Retirement Annuity is a flexible and tax-efficient way to save for retirement. It’s ideal for investors looking for tax-deferred growth and those who have maxed out other retirement accounts. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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