The interest credited to the cash values of personally-owned non-qualified annuities is considered what for tax purposes?

The correct answer is that the interest credited to the cash values of personally-owned non-qualified annuities is considered taxable upon withdrawal for tax purposes.

In the context of non-qualified annuities, the contributions made to the annuity are made with after-tax dollars, meaning that these contributions are not deductible from taxable income when they are made. The growth of the cash value occurs tax-deferred, which means taxes are not paid on the interest earned until money is withdrawn from the annuity. Therefore, when withdrawals are taken from the annuity, the earnings or interest portion becomes taxable income.

This tax treatment is an important feature of non-qualified annuities and is a key consideration for individuals planning their retirement strategies. It allows for growth without immediate tax implications, but it does impose a tax liability on the earnings upon withdrawal, highlighting the need for careful planning around the timing of withdrawals.