Richard,who retired on April 30,2017,receives a monthly employee annuity benefit of $1,400 payable for life,beginning May 1,2017.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 2017 may Richard exclude from gross income?

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The simplified method allows Richard to exclude a portion of his annuity payments based on his contributions and life expectancy. His total annual annuity is $16,800 ($1,400 x 12 months). The exclusion amount is calculated by dividing his total contributions ($29,400) by the number of anticipated monthly payments based on his age (210 for age 66). This results in a monthly exclusion of $140 ($29,400 / 210). For 8 months in 2017, the exclusion is $1,120 ($140 x 8 months).

Richard,who Retired on April 30,2017,receives a Monthly Employee Annuity Benefit