Sam Retired Last Year and Will Receive Annuity Payments for Life

question 125

Multiple Choice

Sam retired last year and will receive annuity payments for life from his employer's qualified retirement plan of $30,000 per year starting this year.During his years of employment,Sam contributed $130,000 to the plan on an after-tax basis. Based on IRS tables,his life expectancy is 260 months.All of the contributions were on a pre-tax basis.This year,Sam will include what amount in income?

• A)0
• B)$6,000
• C)$24,000
• D)$30,000

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Definitions:

Positive Wealth

A situation where the total value of all owned assets exceeds any liabilities, leading to a net positive financial position.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the cost of capital or investment risk.

Mutually Exclusive

Scenarios or occurrences that are incapable of happening simultaneously.

Average Accounting Return

A financial ratio indicating the average net income an asset is expected to generate compared to its average capital cost.