Richard,who retired on April 30,2013,receives a monthly employee annuity benefit of $1,400 payable for life,beginning May 1,2013.During his years of employment,Richard contributed $29,400 to the company's plan.Richard's life expectancy from the IRS tables is 10 years.Using the general rule,how much of the annuity payment amounts received during 2013 $11,200)may Richard exclude from gross income?

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The amount of the annuity payment that Richard may exclude from gross income is $1,960. This is calculated by multiplying the amount of his contributions to the plan ($29,400) by the number of years in his life expectancy (10 years), and then dividing by the number of months in his life expectancy (120 months).

Richard,who Retired on April 30,2013,receives a Monthly Employee Annuity Benefit