What is the primary tax benefit of a qualified annuity?

The primary tax benefit of a qualified annuity lies in the fact that earnings grow tax deferred. This means that the investment growth within the annuity is not taxed until you withdraw the funds. As a result, the money can compound and grow more efficiently over time without the immediate impact of taxes, allowing for potentially greater accumulation of savings for retirement or other goals.

When funds are finally taken out, they will be subject to income tax, as the contributions to a qualified annuity are typically made with pre-tax dollars. This deferral of taxes helps investors maximize their investment returns in the long run, making it a significant advantage for retirement planning.

The other options, while they might contain some elements of truth regarding various types of annuities or financial products, do not accurately capture the specific primary tax benefit associated with qualified annuities.