Sam retired last year and will receive annuity payments for life from his employer's qualified retirement plan of $30,000 per year starting this year.During his years of employment,Sam contributed $130,000 to the plan on an after-tax basis.Based on IRS tables,his life expectancy is 260 months.This year,Sam will include what amount in income?
A)0
B)$6,000
C)$24,000
D)$30,000

Question

Quizplus · Accepted Answer

Sam's annual exclusion ratio is calculated by dividing his after-tax contributions ($130,000) by his life expectancy in months (260), resulting in $500 per month or $6,000 per year. Therefore, $30,000 - $6,000 = $24,000 is the taxable amount he will include in income.

Sam Retired Last Year and Will Receive Annuity Payments for Life