Richard, who retired on April 30, 2014, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2014. 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 annuity payment amounts received during 2014 ($11,200) may Richard exclude from gross income?

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Using the simplified method, Richard can exclude a portion of his annuity payments based on his contributions and life expectancy. The exclusion amount is calculated by dividing his total contributions ($29,400) by the number of anticipated payments (210 for someone aged 66). This results in a monthly exclusion of $140. For 8 months in 2014, the exclusion is $1,120.

Richard, Who Retired on April 30, 2014, Receives a Monthly