Twenty Years Ago Pricilla Purchased an Annuity Costing $19,500 That

question 66

Essay

Twenty years ago Pricilla purchased an annuity costing $19,500 that will pay her $250 per month from age 65 until she dies. Polly is an employee of Evergreen Corporation. During her employment with Evergreen, Polly has paid a total of $20,000 into Evergreen's qualified employee pension plan. Under the plan, Polly is to receive $250 per year from age 65 until she dies. Pricilla and Polly turn 65 during the current year and retire. Each of them has a life expectancy of 12 years from the date of retirement. Discuss the differences in the treatment of the $250 payments each of them receives.

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Definitions:

Supervisory Direction

Guidance and oversight provided by supervisors to ensure tasks and activities are completed according to organizational standards.

Assembly Plant

A manufacturing facility where various components of a product are put together to form a final product.

Contingency Approach

A management theory that suggests the best way to manage an organization depends on the specific circumstances of the situation.

Organizational Design

The process of structuring an organization's roles, responsibilities, and resources to achieve its goals efficiently.