b. Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee when the pension plan provides for matching employee contributions. O A. The taxability of payments received depends on whether the employee contributions were made on a pre-tax or after-tax basis. If the employee contributions were made on a pre-tax basis, all amounts received are fully taxable. If the employee contributions were made on an after-tax basis, amounts received are taxed under the Sec. 72 annuity rules. The employee's contributions are considered the employee's investment in the contract. OB. The taxability of payments received depends on whether the employee contributions were made on a pre-tax or after-tax basis. If the employee contributions were made on a pre-tax basis, amounts received are taxed under the Sec. 72 annuity rules. The employee's contributions are considered the employee's investment in the contract. If the employee contributions were made on an after-tax basis, all amounts received are fully taxable. O C. The distributions are fully taxable when the payment is received.
b. Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee when the pension plan provides for matching employee contributions. O A. The taxability of payments received depends on whether the employee contributions were made on a pre-tax or after-tax basis. If the employee contributions were made on a pre-tax basis, all amounts received are fully taxable. If the employee contributions were made on an after-tax basis, amounts received are taxed under the Sec. 72 annuity rules. The employee's contributions are considered the employee's investment in the contract. OB. The taxability of payments received depends on whether the employee contributions were made on a pre-tax or after-tax basis. If the employee contributions were made on a pre-tax basis, amounts received are taxed under the Sec. 72 annuity rules. The employee's contributions are considered the employee's investment in the contract. If the employee contributions were made on an after-tax basis, all amounts received are fully taxable. O C. The distributions are fully taxable when the payment is received.
Chapter5: Deductions For And From Agi
Section: Chapter Questions
Problem 12MCQ
Related questions
Question
Transcribed Image Text:**Qualified Pension Plan Distributions Explained**
Distributions from a qualified pension plan, when made as annuity payments, are reported by an employee under the following conditions:
a. **Without Employee Contributions:**
- **A.** The distributions are taxable only when the taxpayer is retired.
- **B.** The distributions are taxable only once the taxpayer reaches the age of 65.
- **C.** The distributions are fully taxable when the payment is received. *(Selected option)*
- **D.** The distributions are not taxable when the payment is received.
b. **With Matching Employee Contributions:**
- **A.** The taxability depends on whether contributions were pre-tax or after-tax:
- For pre-tax contributions, all received amounts are fully taxable.
- For after-tax contributions, amounts are taxed under Sec. 72 annuity rules, considering them as employee's investment.
- **B.** The taxability depends on whether contributions were pre-tax or after-tax:
- Pre-tax contributions follow Sec. 72 annuity rules, treating them as employee’s investment.
- For after-tax contributions, all received amounts are fully taxable.
- **C.** The distributions are fully taxable when payment is received.
- **D.** The distributions are not taxable when the payment is received.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning