Participant in a qualified pension plan

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Reference no: EM13751915

Pat is a participant in a qualified pension plan. She retires on January 1, 2014, at age 63, and receives pension payments beginning in January 2014. 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 rate (or tax-deferred) basis, and the number of anticipated payments based on Pat’s age of 63 years is 260 months (see IRS table previously discussed in class) from the date she starts receiving payments.

What gross income will Pat recognize in 2014 and each year thereafter?

How would your answer change if Pat made contributions to the plan on an after-tax basis?

If, in Part b, Pat dies in December 2016 after receiving pension payments for almost two full years, what tax consequences occur in the year of death?

Reference no: EM13751915

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