Richard, who retired on April 30, 2018, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2018.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 2018 may Richard exclude from gross income?

Question

Quizplus · Accepted Answer

Under the simplified method, Richard's total contributions are divided by a factor based on his age at the start of the annuity. For age 66, the factor is 210. Thus, $29,400 / 210 = $140 per month is excluded. For 8 months in 2018, $140 x 8 = $1,120 can be excluded from gross income.

Richard, Who Retired on April 30, 2018, Receives a Monthly