Pam retires after 28 years of service with her employer. She is 66 years old and has contributed $42,000 to her employer’s qualified pension fund. She elects to receive her retirement benefits as an of $3,000 per month for the remainder of her life.
a. Assume that Pam retires in June 2015 and collects six payments this year. What is her gross income from the payments in the first year?
b. Assume that Pam lives 25 years after retiring. What is her gross income from the payments in the twenty-fourth year?
c. Assume that Pam dies after collecting 160 payments. She collected eight payments in the year of her death. What are Pam’s gross income and deductions from the contract in the year of her death?
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