Richard, who retired on April 30, 2019, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2019. During his years of employment, Richard contributed $29,400 to the company's plan. Richard's age on May 1 is 66. Using the simplified method, how much of the $11,200 annuity payment received during 2019 may Richard exclude from gross income?

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Using the simplified method, Richard's total contributions are divided by the number of anticipated monthly payments based on his age at the annuity start date. At age 66, the IRS table provides 210 anticipated payments. $29,400 divided by 210 equals $140 per month. For 8 months in 2019, $140 x 8 = $1,120 can be excluded from gross income.

Richard, Who Retired on April 30, 2019, Receives a Monthly