Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 24

Using the simplified method, determine the tax-free amount of the following distributions from a qualified pension plan. Contributions, if any, are made with previously-taxed dollars.
a. Person A, age 59, made no contributions to the pension plan and will receive a $500 monthly check for life.
b. Person B, age 66, made contributions of $23,000 to the pension plan and will receive a monthly check of $1,300 for life.
c. Person C, age 64, made contributions of $19,000 to the pension plan and will receive monthly payments of $1,200 over her life and the life of her 67-year-old husband.
d. Person D, age 55, made contributions of $32,000 to the pension plan. He will receive quarterly payments of $5,000 over his life and the life of his 58-year-old wife.