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Trevor, a 35 year old single taxpayer, contributed $25000 to a commercial annuity in 2014. The...

Trevor, a 35 year old single taxpayer, contributed $25000 to a commercial annuity in 2014. The annuity is a nonqualified plan. In 2018, before the annuity start date, Trevor took a $2500 nonperiodic distribution and used the money to pay off his credit card debt. If the value of the annuity at the time of the distribution was $30000, how much of the distribution is taxable?

A. $0

b. $417

c. $500

d. $2500

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Answer #1

Answer-(d) Because if you withdraw the annuity before the start date then 10% of portion is taxable then 10% of 25,000 is tax

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