Pat is a participant in a qualified pension plan. She retires on January 1, 2016, at age

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Pat is a participant in a qualified pension plan. She retires on January 1, 2016, at age 63, and receives pension payments beginning in January 2016. Her pension payments, which will be received monthly for life, amount to $1,000 per month. Pat contributed $30,000 to the pension plan on a pre-tax (or tax-deferred) basis, and the number of anticipated payments based on Pat’s age of 63 years is 260 months (see IRS table in Chapter I:3) from the date she starts receiving payments.
a. What gross income will Pat recognize in 2016 and each year thereafter?
b. How would your answer to Part a change if Pat made contributions to the plan on an after-tax basis?
c. If, in Part b, Pat dies in December 2017 after receiving pension payments for two full years, what tax consequences occur in the year of death?

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Federal Taxation 2017 Individuals

ISBN: 9780134420868

30th Edition

Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson

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