Ask Question
31 August, 06:35

Retired public school teacher, age 65, has deposited a total of $10,000 into a nonqualified variable annuity, and her account's current value is $16,000. if she wishes to take a lump-sum withdrawal of the full amount, how much of this withdrawal is taxed at the ordinary income tax r

+2
Answers (1)
  1. 31 August, 06:51
    0
    The answer is - $6,000.00

    Explanation:

    Contributions to a nonqualified annuity represent cost-base dollars. When the contributions are paid out, cost base represents a return of capital and is not subject to tax. The growth in an annuity is taxdeferred

    and is taxable upon receipt. In this case, of the total distribution of $16,000, the return of contributions was $10,000, leaving $6,000 taxable as ordinary income.

    Reference: 3.8.1 in the License Exam Manual.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Retired public school teacher, age 65, has deposited a total of $10,000 into a nonqualified variable annuity, and her account's current ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers