Myra retired last year from Whiplash Company after working there for 30 years. She elects to take her retirement benefits in the form of a lifetime annuity. Her retirement balance consists of $40,000 of employer contributions, $80,000 of her before-tax contributions, $20,000 of her after-tax contributions, and $60,000 of investment income. The plan will pay her $1,500 per month based on her life expectancy of 22 years. In 2017, Myra receives twelve $1,500 payments. What is her taxable income?
A) $18,000
B) $17,091
C) $14,364
D) $13,455

Question

Quizplus · Accepted Answer

$200,000 basis in the annuity; [($1,500 x 12 x 22) - $20,000]/($1,500 x 12 x 22)] x ($1,500 x 12) = $17,091

Myra Retired Last Year from Whiplash Company After Working There