Below, find the IRS definitions of "pension" and "annuity." Knowing how the federal tax agency defines these terms can be helpful for American taxpayers.

Pension vs. Annuity - A pension is a series of payments made to an individual at his/her retirement, while an annuity is a series of payments under a contract (e.g., an insurance annuity).

Tax-Sheltered Annuity - A special kind of annuity contract purchased for a public school employee or the employee of a tax-exempt organization. This type of arrangement is also commonly referred to as a 403(b) plan.

Qualified Employer Plan - An employer’s stock bonus, pension, or profit-sharing plan that meets Internal Revenue Code (IRC) requirements. A qualified plan gives its participants special tax benefits—e.g., tax deferral of contributions, rollover privileges, special 10-year averaging in some cases, etc.

Non-qualified Employer Plan - An employer’s plan that doesn’t meet IRC requirements; it doesn’t receive most of the benefits afforded to a qualified employee plan.