Under What Circumstances Might an Individual Want to Establish an Annuity
Under what circumstances might an individual want to establish an annuity contract in retirement?
Randy is entitled to receive monthly payments of $2,500 over his life from his employer's qualified pension plan or he can take $2,300 over his life and the life of his wife.The payments begin May 1,2016.Randy contributed $106,000 to the plan prior to his retirement.Randy is 67 and his wife is 65.Using the simplified method,how much of the payments will be included in Randy's income for 2016 in each of the following independent situations? a.Randy chooses to take payments of $2,500 over his life. b.Randy chooses to take payments of $2,300 over his life and the life of his wife.
Heather,age 67,retired in 2016.During the year she received distributions of $14,000 from her IRA.She made nondeductible contributions of $40,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2016,the value of her IRA was $250,000.Calculate the taxable portion of Heather's distribution and her tax basis in the IRA after the distribution that she will carry forward to 2017.
Keisha established a Roth IRA in 2006.She contributes the maximum amount each year for the next 20 years and retires when she is 65.At the time of her retirement,the account has a balance of $248,000,which is made up of $100,000 in contributions and the balance in earnings.What amount can Keisha withdraw tax-free from the Roth IRA each year during her retirement?