What amount will be tax-excludible to the annuitant?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Just prior to the payout period the amount of money that is available in the contract as principal paid in over the life of the annuity is determined at $200,000. The total annuity is currently valued at $360,000. The annuity payment is calculated at $24,000 per year. Our client wants to retire at age 65. The IRS Tables multiplier from the IRS Table for Age 65 is 15 (remaining life expectancy). What amount will be tax-excludible to the annuitant?
$1,111 until the principal amount has been exhausted
$888.89 for the life of the annuitant
$1,111 for the life of the annuitant
$888.89 until the principal amount has been exhausted
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