01.Core Concepts

Example: Ben, age 65, purchased an immediate annuity for $108,000 that pays a lifetime monthly income of $1,000 Based on the IRS actuarial table, he has a life expectancy of 20 years Expected return is 20 x 12 x $1,000 = $240,000 The exclusion ratio = $108,000/$240,000 = .45 Each year, he receives $5,400 tax free and $6,600 that is taxable ‹#›